10q10k10q10k.net

What changed in LOGITECH INTERNATIONAL S.A.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of LOGITECH INTERNATIONAL S.A.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+370 added−457 removedSource: 10-K (2023-05-17) vs 10-K (2022-05-18)

Top changes in LOGITECH INTERNATIONAL S.A.'s 2023 10-K

370 paragraphs added · 457 removed · 279 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

69 edited+28 added−55 removed55 unchanged
Biggest changeLogitech International S.A. | Fiscal 2022 Form 10-K | 6 Table of Contents • The Logitech G PRO X Superlight Wireless Gaming Mouse that was designed in collaboration with the world's top esports professionals, features our LIGHTSPEED TM professional grade wireless technology, and weighs less than 63 grams • The Logitech G923 Steering Wheel that works on PC, XBOX and Playstation, and features a hand-stitched leather-wrapped rim, stainless steel throttle, brake and clutch pedals and the exclusive TRUEFORCE force feedback system that connects directly to in-game physics for unprecedented realism. • The ASTRO A50 Wireless Headset and Base Station that targets the discerning “prosumer” consumer, featuring integrated MixAmp technology, Dolby® Digital surround sound and the ASTRO Command Center Software system.
Biggest changeIncorporating innovative design and advanced technologies, some of the key products and solutions in this category include: • The Logitech G PRO X Superlight Wireless Gaming Mouse that was designed in collaboration with the world's top esports professionals, featuring our LIGHTSPEED TM professional grade wireless technology, and weighing in at less than 63 grams. • The Logitech Pro Racing Wheel that features our exclusive TRUEFORCE feedback system that connects directly to in-game physics, and our new Direct Drive motor. • The ASTRO A30 Wireless Headset that is compatible with PC, Xbox Series X|S, PlayStation5, Nintendo Switch, and mobile, portable gaming devices.
Our key products in this category include: • Logitech Rally Bar, an all-in-one video bar purpose-built for midsize rooms, featuring brilliant video, room-filling audio, and the flexibility to deploy in PC or appliance mode. • Logitech Rally which offers best-in-class video conferencing with Ultra HD 4K video and professional audio that easily turns medium- to large-sized conference rooms into video-enabled collaboration rooms. • Logitech MeetUp which is Logitech’s premier ConferenceCam designed for huddle rooms, with a room-capturing 120° field of view ("FOV") , 4K optics and exceptional audio performance. • Logitech Tap touch-screen controller which connects to any computer via USB and serves as an ideal controller for video conferencing room solutions from Google®, Microsoft®, and Zoom. • Logitech BRIO which has 4K video, RightLight 3 and high dynamic range ("HDR") to improve challenging lighting, and Windows Hello facial recognition support for secure login using just a user's face.
Our key products in this category include: • Logitech Rally Bar, an all-in-one video bar purpose-built for midsize rooms, featuring brilliant video, room-filling audio, and the flexibility to deploy in PC or appliance mode. • Logitech Rally which offers best-in-class video conferencing with Ultra HD 4K video and professional audio that easily turns medium- to large-sized conference rooms into video-enabled collaboration rooms. • Logitech MeetUp which is Logitech’s premier ConferenceCam designed for huddle rooms, with a room-capturing 120° field of view ("FOV") , 4K optics and exceptional audio performance. • Logitech Tap touch-screen controller which connects to any computer through USB and serves as an ideal controller for video conferencing room solutions from Google®, Microsoft®, and Zoom. • Logitech BRIO which has 4K video, RightLight 3 and high dynamic range ("HDR") to improve challenging lighting, and Windows Hello facial recognition support for secure login using just a user's face.
We continue to focus on ensuring the efficiency of the Suzhou facilities, through the implementation of quality management, automation, process improvements, and employee involvement programs. We outsource the remaining production to contract manufacturers and original design manufacturers located in Asia. Both our in-house and outsourced manufacturing operations are managed by our worldwide operations group.
We continue to focus on ensuring the efficiency of the Suzhou facilities, through the implementation of quality management, automation, process improvements, and employee involvement programs. We outsource the remaining production to contract manufacturers and original design manufacturers located principally in Asia. Both our in-house and outsourced manufacturing operations are managed by our worldwide operations group.
For more information about such regulations and how they may impact us, see "Risks Related to our Global Operations and Regulatory Environment" and “We are subject to risks related to our environmental, social and governance activities and disclosures” in Item 1A "Risk Factors" and Note 7—Income Taxes in our Notes to consolidated financial statements below.
For more information about such regulations and how they may impact us, see "Risks Related to our Global Operations and Regulatory Environment" and “We are subject to risks related to our environmental, social and governance ("ESG") activities and disclosures” in Item 1A "Risk Factors" and Note 7—Income Taxes in our Notes to consolidated financial statements below.
We recently added the MX Keys mini wireless keyboard ideal for smaller spaces and creators. • The Logitech K380 wireless minimalist keyboard with multi-switch functionality to easily navigate from one screen to another (from PC to Phone to tablets) that is compatible with any computer.
We recently added the MX Keys mini wireless keyboard ideal for smaller spaces and creators and Logitech MX mechanical wireless keyboard. • The Logitech K380 wireless minimalist keyboard with multi-switch functionality to easily navigate from one screen to another (from PC to Phone to tablets) that is compatible with any computer.
The worldwide operations group also supports the business units and marketing and sales organizations through the management of distribution centers and the supply chain and logistics networks. New product launches, process engineering, commodities management, logistics, quality assurance, operations management and management of Logitech's contract manufacturers occur in China, Taiwan, Hong Kong, Malaysia, and Vietnam.
The worldwide operations group also supports the business units and marketing and sales organizations through the management of distribution centers and the supply chain and logistics networks. New product launches, process engineering, commodities management, logistics, quality assurance, operations management and management of Logitech's contract manufacturers occur in China, Taiwan, Hong Kong, Malaysia, Thailand, Mexico, and Vietnam.
PC Webcams: Our primary competitors for PC webcams are Microsoft and other manufacturers taking smaller market share such as Razer Inc ("Razer"). Tablet & Other Accessories: Competitors in the tablet keyboard market are Apple, Zagg Inc., Kensington Computer Products Group, Belkin International, Inc., Targus Corporation and other less-established brands.
PC Webcams: Our primary competitors for PC webcams are Microsoft, Cisco and other manufacturers taking smaller market share such as Razer Inc ("Razer") and HIKVision. Tablet & Other Accessories: Competitors in the tablet keyboard market are Apple, Zagg Inc., Kensington Computer Products Group, Belkin International, Inc., Targus Corporation and other less-established brands.
In addition, lead times for materials, components, and products ordered by us or by our contract manufacturers can vary significantly and depend on factors such as contract terms, demand for a component, our ability to forecast product demand, and supplier capacity.
Lead times for materials, components, and products ordered by us or by our contract manufacturers can vary significantly and depend on factors such as contract terms, demand for a component, our ability to forecast product demand, and supplier capacity.
Shareholders and members of the public may elect to receive e-mails when Logitech issues press releases upon the occurrence of significant events within Logitech or other press releases by subscribing through http://ir.logitech.com/alerts.cfm.
Shareholders and members of the public may elect to receive alerts when Logitech issues press releases upon the occurrence of significant events within Logitech or other press releases by subscribing through http://ir.logitech.com/alerts.cfm.
There are also stewardship costs associated with the end-of-life collection, recycling and recovery of Logitech products, packaging and batteries where Logitech is recognized as the steward and participates in relevant programs. The costs and schedule requirements are industry requirements and therefore do not represent an undue burden relative to Logitech's competitive position.
There are stewardship costs associated with the end-of-life collection, recycling and recovery of Logitech products, packaging and batteries where Logitech is recognized as the steward and participates in relevant programs. The cost requirements are industry requirements and therefore do not represent an undue burden relative to Logitech's competitive position.
We have made a voluntary adherence to the Paris Accord international agreement for climate action and we have developed and adopted the principle of Carbon Transparency to catalyze reductions in our corporate carbon footprint, uptake of renewable power and materials and our journey to net zero.
We have made a voluntary adherence to the Paris Accord international agreement for climate action and we have developed and adopted the principle of Design for Sustainability ("DfS") and Carbon Transparency to catalyze reductions in our corporate carbon footprint, uptake of renewable power and materials and our journey to net zero.
In the U.S., underrepresented minorities (defined as Black or African American, Asian, Hispanic or Latino, American Indian or Alaska Native, and Native Hawaiian or Other Pacific Islander) represented 45% of our workforce, and 43% were in managerial roles. To foster a more inclusive environment, we offer training sessions to emphasize awareness of self, bias and privilege, and inclusion.
In the U.S., underrepresented minorities (defined as Black or African American, Asian, Hispanic or Latino, American Indian or Alaska Native, and Native Hawaiian or Other Pacific Islander) represented 47% of our workforce, and 44% were in managerial roles. To foster a more inclusive environment, we offer training sessions to emphasize awareness of self, bias and privilege, and inclusion.
Personal voice assistants and other devices that offer music, such as Sonos, Amazon's Echo, Google Home (owned by Alphabet, Inc.) and Apple HomePod, also compete with our products. Amazon is also a significant customer of our products.
Harman is our largest competitor. Personal voice assistants and other devices that offer music, such as Sonos, Amazon's Echo, Google Home (owned by Alphabet, Inc.) and Apple HomePod, also compete with our products. Amazon is also a significant customer of our products.
Video Collaboration The Video Collaboration category includes Logitech’s ConferenceCams, which combine enterprise-quality audio and high definition ("HD") 4K video with affordability to bring video conferencing to businesses of any size, as well as state of the art webcams and headsets that turn any desktop into an instant collaboration space.
Video Collaboration The Video Collaboration category includes Logitech’s conference room cameras, which combine enterprise-quality audio and high definition ("HD") 4K video with affordability to bring video conferencing to businesses of any size, as well as state of the art webcams and headsets that turn any desktop into an instant collaboration space.
Furthermore, we continue to extend our engineering capabilities into more advanced technologies such as software, apps, cloud, data analytics, machine learning and some core building blocks of navigation and tracking in augmented reality ("AR") / virtual reality ("VR").
Furthermore, we continue to extend our engineering capabilities into more advanced technologies such as software, apps, cloud, data analytics, machine learning, artificial intelligence ("AI") and some core building blocks of navigation and tracking in augmented reality ("AR") or virtual reality ("VR").
Logitech International S.A. | Fiscal 2022 Form 10-K | 4 Table of Contents Engineering Our decades-long expertise in key engineering disciplines such as sensors, acoustics, optics, wireless, and power management is a core competitive advantage of Logitech.
Logitech International S.A. | Fiscal 2023 Form 10-K | 3 Table of Contents Engineering Our decades-long expertise in key engineering disciplines such as sensors, acoustics, optics, wireless, and power management is a core competitive advantage of Logitech.
We strive to continually improve the energy and carbon efficiency of our operations, supply chain and product portfolio. We are committed to carbon transparency through product carbon footprint labeling and ensuring that the consumer is engaged and aware of the impact of their purchase.
We strive to continually improve the energy and carbon efficiency of our operations, supply chain and product portfolio through our DfS deployment during product development. We are committed to carbon transparency through product carbon footprint labeling and ensuring that the consumer is engaged and aware of the impact of their purchase.
Creativity and Productivity Pointing Devices: Apple Inc. ("Apple"), Microsoft Corporation ("Microsoft"), Lenovo Group Ltd (“Lenovo”) and HP Inc. are our main competitors worldwide. We also experience competition and pricing pressure from less-established brands, including house brands and local competitors in Asian markets, such as Elecom Co., Ltd., Buffalo Inc., Shenzhen Rapoo Technology Co., Ltd. (“Shenzhen Rapoo”), and Xiaomi Corporation.
("Apple"), Microsoft Corporation ("Microsoft"), Lenovo Group Ltd (“Lenovo”), Dell Technologies Inc. ("Dell"), and HP Inc. are our main competitors worldwide. We also experience competition and pricing pressure from less-established brands, including house brands and local competitors in Asian markets, such as Elecom Co., Ltd., Buffalo Inc., Shenzhen Rapoo Technology Co., Ltd. (“Shenzhen Rapoo”), and Xiaomi Corporation.
Gaming Competitors for our Gaming products include Razer, Corsair Gaming, Inc., SteelSeries, Turtle Beach Corporation and HyperX (acquired by HP Inc. in 2021), among others. Video Collaboration Our competitors for Video Collaboration products include Cisco Systems, Inc., Poly, Inc. ("Poly"), GN Netcom/Jabra, AVer Information Inc., Neat and Yealink (Xiamen) Network Technology Co.Ltd, among others.
Gaming Competitors for our gaming products include Razer, Corsair Gaming, Inc., SteelSeries (owned by GN), Turtle Beach Corporation and HyperX (owned by HP Inc.), among others. Video Collaboration Our competitors for Video Collaboration products include Cisco Systems, Inc., Poly (owned by HP Inc.), Jabra (owned by GN), AVer Information Inc., Neat and Yealink (Xiamen) Network Technology Co.Ltd, among others.
In addition, to measure our employees’ satisfaction at Logitech, we distribute a bi-annual employee engagement survey. Most recently, we conducted a survey in December 2021, in which 83% of our global office employees participated.
In addition, to measure our employees’ satisfaction at Logitech, we distribute a bi-annual employee engagement survey. Most recently, we conducted a survey in December 2022, in which 85% of our global office employees participated.
Arunkundrum holds a BTech degree in Chemical Engineering from Central ElectroChemical Research Institute ("CECRI") in Karaikudi, India and a Master of Science in Materials Engineering from University of Maryland at College Park. Samantha Harnett joined Logitech as General Counsel in June 2020. Prior to joining Logitech, Ms.
Arunkundrum holds a BTech degree in Chemical Engineering from Central ElectroChemical Research Institute ("CECRI") in Karaikudi, India and a Master of Science in Materials Engineering from University of Maryland at College Park. Samantha Harnett joined Logitech as General Counsel in June 2020 and became Chief Legal Officer in April 2023. Prior to joining Logitech, Ms.
In fiscal years 2022, 2021 and 2020, Amazon Inc. and its affiliated entities together accounted for 17%, 13% and 14% of our gross sales, respectively. In fiscal years 2022, 2021 and 2020, Ingram Micro Inc. and its affiliated entities together accounted for 15%, 14% and 12% of our gross sales, respectively.
In fiscal years 2023, 2022 and 2021, Amazon Inc. and its affiliated entities together accounted for 19%, 17% and 13% of our gross sales, respectively. In fiscal years 2023, 2022 and 2021, Ingram Micro Inc. and its affiliated entities together accounted for 13%, 15% and 14% of our gross sales, respectively.
In fiscal years 2022, 2021 and 2020, revenues from sales to customers in the United States represented 34%, 35% and 36% of our sales, respectively. In fiscal years 2022, 2021 and 2020, revenues from sales to customers in Germany represented 15%, 16% and 15% of our sales, respectively.
In fiscal years 2023, 2022 and 2021, revenues from sales to customers in the United States represented 35%, 34% and 35% of our sales, respectively. In fiscal years 2023, 2022 and 2021, revenues from sales to customers in Germany represented 14% , 15% and 16% of our sales, respectively.
During fiscal year 2022, our collection of portable bluetooth speakers included, WONDERBOOM2, BOOM3, MEGABOOM, MEGABOOM3, and our largest most powerful speaker HYPERBOOM that delivers the loudest and most rich audio performance in the portfolio.
During fiscal year 2023 , our collection of portable Bluetooth speakers included WONDERBOOM3, BOOM3, MEGABOOM3, and our largest most powerful speaker HYPERBOOM that delivers the loudest and most rich audio performance in the portfolio.
Audio & Wearables: Our Audio & Wearables category comprises PC speakers, PC headsets, in-ear headphones, premium wireless audio wearables designed to enhance the audio experience and studio-quality Blue Microphones for professionals and consumers.
Audio & Wearables: Our Audio & Wearables category comprises PC speakers, PC headsets, in-ear headphones, premium wireless audio wearables designed to enhance the audio experience, and studio-quality Blue Microphones for professionals and consumers, such as Yeti, Yeti Nano and Yeti X.
Music Mobile Speakers: Our Mobile Speakers category is a portfolio of portable wireless Bluetooth and Wi-Fi connected speakers for music on the go. The top revenue-generating product in our Mobile Speakers category during fiscal year 2022 was Ultimate Ears BOOM 3 ("BOOM3"), our small sized ruggedized portable Bluetooth wireless speaker.
Music Mobile Speakers: Our Mobile Speakers category is a portfolio of portable wireless Bluetooth speakers for music on the go. The top revenue-generating product in our Mobile Speakers category during fiscal year 2023 was Ultimate Ears BOOM 3 ("BOOM3"), our ruggedized portable Bluetooth wireless speaker.
As of March 31, 2022, females represented 37% of our global office employees, 37% of our manufacturing workforce, and 34% were in managerial roles.
As of March 31, 2023, females represented 38% of our global office employees, 36% of our manufacturing workforce, and 34% were in managerial roles.
Prakash Arunkundrum is Logitech’s Head of Global Operations & Sustainability, a position he has held since May 2018. He joined Logitech in 2015 and held operations positions as Vice President New Product Introductions & Strategic Initiatives from August 2015 to July 2016 and Vice President Global Sourcing and New Product Introductions from July 2016 to May 2018.
He was previously Logitech's Head of Global Operations & Sustainability, a role he held from May 2018. He joined Logitech in 2015 and held operations positions as Vice President New Product Introductions & Strategic Initiatives from August 2015 to July 2016 and Vice President Global Sourcing and New Product Introductions from July 2016 to May 2018.
Our direct employees are located across Americas, EMEA and Asia-Pacific and bring a range of perspectives and skills to Logitech. As of March 31, 2022, 44% of our office employees were located in Asia-Pacific, 33% in the Americas, and 23% in EMEA.
Our direct employees are located across Americas, EMEA and Asia-Pacific and bring a range of perspectives and skills to Logitech. As of March 31, 2023, 46% of our office employees were located in Asia-Pacific, 30% in the Americas, and 24% in EMEA.
Certain components are manufactured to Logitech's specifications by vendors in Asia, the United States, and Europe. We also use contract manufacturers to supplement internal capacity and to reduce volatility in production volumes. In addition, some products, including most keyboards, certain gaming devices and certain audio products are manufactured by contract manufacturers to Logitech's specifications.
Certain components are manufactured to Logitech's specifications by vendors in Asia, the United States, and Europe. We also use contract manufacturers to supplement internal capacity and to reduce volatility in production volumes.
Sales and Distribution Principal Markets Sales by geographic region (based on customers' location) for fiscal years 2022, 2021 and 2020 are as follows (in thousands): Year Ended March 31, 2022 2021 2020 Americas $ 2,317,941 $ 2,206,552 $ 1,286,527 EMEA 1,724,027 1,735,682 941,211 Asia Pacific 1,439,133 1,310,045 748,113 Total Sales $ 5,481,101 $ 5,252,279 $ 2,975,851 Revenues from sales to customers in Switzerland, our home domicile, represented 3%, 3% and 4% of our sales in fiscal years 2022, 2021 and 2020, respectively.
Sales and Distribution Principal Markets Sales by geographic region (based on customers' location) for fiscal years 2023, 2022 and 2021 are as follows (in thousands): Year Ended March 31, 2023 2022 2021 Americas $ 1,930,908 $ 2,317,941 $ 2,206,552 EMEA 1,299,657 1,724,027 1,735,682 Asia Pacific 1,308,253 1,439,133 1,310,045 Total Sales $ 4,538,818 $ 5,481,101 $ 5,252,279 Revenues from sales to customers in Switzerland, our country of domicile, represented 3% of our sales for each of fiscal years 2023, 2022 and 2021.
Logitech International S.A. | Fiscal 2022 Form 10-K | 15 Table of Contents
Logitech International S.A. | Fiscal 2023 Form 10-K | 13 Table of Contents
No single patent is in itself essential to Logitech as a whole. From time to time, we receive claims that we may be infringing on patents or other intellectual property rights of others.
No single patent is in itself essential to Logitech as a whole. From time to time, we receive claims that we may be infringing on patents or other intellectual property rights of others. As appropriate, claims are referred to legal counsel, and current claims are in various stages of evaluation and negotiation.
PC Webcams: Our PC Webcams category comprises webcams targeted primarily at video conferencing users purchasing for individual use. A key market driver includes people upgrading their work-from-home video conferencing setup. The Logitech HD Pro Webcam C920 and C922 were our key products in this category during fiscal year 2022.
PC Webcams: Our PC Webcams category comprises webcams targeted primarily at video conferencing users purchasing for individual use. A key market driver includes people upgrading their work-from-home video conferencing setup. The Logitech HD Pro Webcam C920 and C922 are key products in this category and we recently added Logitech Brio 300 and Brio 500 to the portfolio.
Logitech International S.A. | Fiscal 2022 Form 10-K | 11 Table of Contents Modern Slavery : Our commitment to combat slavery and human trafficking is underpinned by the Transparency in Supply Chain Act of 2010 (S.B. 657), the United Kingdom Modern Slavery Act of 2015, the California Transparency in Supply Chains Act of 2010, the Australian Modern Slavery Act of 2018 and exiting or emerging similar legislation worldwide.
Modern Slavery : Our commitment to combat slavery and human trafficking is underpinned by the Transparency in Supply Chain Act of 2010 (S.B. 657), the United Kingdom Modern Slavery Act of 2015, the California Transparency in Supply Chains Act of 2010, the Australian Modern Slavery Act of 2018 and existing or emerging similar legislation worldwide.
Audio & Wearables: For PC speakers, our competitors include Bose, Cyber Acoustics, LLC, Philips Consumer Lifestyle (a division of Royal Philips), Creative Labs, Inc., among others. For PC headsets, our main competitors include Poly and GN Netcom, among others. In-ear headphones competitors include Beats, Bose, Apple, Sony Corporation ("Sony"), JBL and Sennheiser, among others.
Audio & Wearables: For PC speakers, our competitors include Bose, Cyber Acoustics LLC, and Creative Labs, Inc., among others. For PC headsets, our main competitors include Poly (owned by HP Inc.) and Jabra (owned by GN), among others. In-ear headphones competitors include Beats, Bose, Apple, Sony Corporation ("Sony"), JBL and Sennheiser, among others.
Music Mobile Speakers: Our competitors for Bluetooth wireless speakers include Bose Corporation ("Bose"), Harman International Industries, Inc (owned by Samsung Electronics Co., Ltd., Harman owns JBL and has Harman Kardon as a division), and Beats Electronics LLC ("Beats") (owned by Apple), among others. Harman is our largest competitor.
Logitech International S.A. | Fiscal 2023 Form 10-K | 8 Table of Contents Music Mobile Speakers: Our competitors for Bluetooth wireless speakers include Bose Corporation ("Bose"), Harman International Industries, Inc (owned by Samsung Electronics Co., Ltd., Harman owns JBL and has Harman Kardon as a division), and Beats Electronics LLC ("Beats") (owned by Apple), among others.
As part of the survey, employees provided weighted feedback on their experience at Logitech, on measures such as happiness, retention and their perspective on our current state of workplace inclusivity at Logitech. Safety, Health and Well-being We look to safeguard the safety, health and well-being of all members of the Logitech team.
As part of the survey, employees provided weighted feedback on their experience at Logitech, on measures such as happiness, retention and their perspective on our current state of workplace inclusivity at Logitech.
Logitech International S.A. | Fiscal 2022 Form 10-K | 9 Table of Contents We expect continued competitive pressure in our business, including in the terms and conditions that our competitors offer customers, which may be more favorable than our terms and conditions and may require us to take actions to increase our customer incentive programs, which could impact our sales and operating margins.
We expect continued competitive pressure in our business, including in the terms and conditions that our competitors offer customers, which may be more favorable than our terms and conditions and may require us to take actions to increase our customer incentive programs, which could impact our sales and operating margins. Creativity and Productivity Pointing Devices: Apple Inc.
As regulations change, we will modify our products or processes to address those changes. Seasonality Our product sales are typically seasonal. Sales are generally highest during our third fiscal quarter (October to December) primarily due to the increased consumer demand for our products during the year-end holiday buying season and year-end spending by enterprises.
Sales are generally highest during our third fiscal quarter (October to December) primarily due to the increased consumer demand for our products during the year-end holiday buying season and year-end spending by enterprises.
Energy: Our products are subject to various federal, state, local and foreign laws governing energy management or encouraging manufacturers and importers to produce products designed to minimize overall environmental impact.
Logitech International S.A. | Fiscal 2023 Form 10-K | 10 Table of Contents Energy: A number of our products are subject to various federal, state, local and foreign laws governing energy management or encouraging manufacturers and importers to produce products designed to minimize overall environmental impact.
Prior to joining Logitech, Mr. Arunkundrum was a Principal at A.T. Kearney, a global management consulting firm, from July 2014 to August 2015.
Prior to joining Logitech, Mr. Arunkundrum was a Principal at A.T. Kearney, a global management Logitech International S.A. | Fiscal 2023 Form 10-K | 12 Table of Contents consulting firm, from July 2014 to August 2015.
Our research and development expenses for fiscal years 2022, 2021 and 2020 were $291.8 million, $226.0 million and $177.6 million, respectively. We expect to continue to devote significant resources to research and development, including devices for digital platforms, video communications, wireless technologies, power management, and user interfaces to sustain our competitive position.
We expect to continue to devote significant resources to research and development, including devices for digital platforms, video communications, wireless technologies, power management, and user interfaces to sustain our competitive position.
Refer also to the discussion in Item 1A "Risk Factors—"We may be unable to protect our proprietary rights.
If necessary or desirable, we may seek licenses for certain intellectual property rights. Refer also to the discussion in Item 1A "Risk Factors—"We may be unable to protect our proprietary rights.
Our supply chain’s extensive global reach, key distribution channels, adoption of factory automation and strategic business relationships combined with extensive analytic modeling expertise, optimization tools and global processes provide a competitive advantage against many of our competitors. Products Logitech designs, manufactures and markets products that allow people to connect through computing, gaming, video, music, and other digital platforms.
Our supply chain’s extensive global reach, key distribution channels, adoption of factory automation and strategic business relationships combined with extensive analytic modeling expertise, optimization tools and global processes provide a competitive advantage against many of our competitors.
In Korea and China, there are multiple locations where consumers may obtain service for their Logitech products. These locations are managed by third-party logistics providers. Consumers who have purchased Logitech products can visit these locations for product inspection, testing and return or exchange of products.
We also have multiple walk-in centers in Korea and China, managed by third-party providers, where consumers may obtain service for their Logitech products. Consumers who have purchased Logitech products can visit these locations for product inspection, testing and return or exchange of products. Logitech provides warranties on our branded products that range from one to five years.
Two of our customers merged during fiscal year 2022 and the combined company, TD Synnex, accounted for 14% of our gross sales for fiscal year 2022. No other customer individually accounted for more than 10% of our gross sales during fiscal years 2022, 2021 or 2020.
TD Synnex and its affiliate entities together accounted for 15% and 14% of our gross sales for fiscal year 2023 and 2022, respectively. No other customer individually accounted for more than 10% of our gross sales during fiscal years 2023, 2022 or 2021.
Environmental Regulation We are subject to environmental regulations in a number of jurisdictions, including the following regulations: Targeted Substances.
Logitech International S.A. | Fiscal 2023 Form 10-K | 9 Table of Contents Environmental Regulation We are subject to environmental regulations in a number of jurisdictions, including the following regulations: Targeted Substances.
Logitech International S.A. | Fiscal 2022 Form 10-K | 12 Table of Contents Human Capital Resources Employees Our human capital resources include persons employed directly by us or indirectly through contingent workforce arrangements. As of March 31, 2022, we employed approximately 8,200 persons, of which approximately 3,000 were employed, directly and indirectly in our Suzhou manufacturing operations.
Human Capital Resources Employees Our human capital resources include persons employed directly by us or indirectly through contingent workforce arrangements. As of March 31, 2023, we employed approximately 7,400 persons, of which approximately 2,400 were employed, directly and indirectly, in our Suzhou manufacturing operations.
Business Strategy Logitech's foundation for future growth is built on five core capabilities that apply to all of our product categories: • Design; • Engineering; • Go-to-market; • Marketing; and • Operations. Design In the past few years, Logitech has strengthened its design capabilities by building a world-class team of internal designers.
Business Strategy Logitech's foundation for future growth is built on five core capabilities that apply to all of our product categories: • Design; • Engineering; • Go-to-market; • Marketing; and • Operations. Design Over the past decade, Logitech has reinvented itself as a design company, whereby design-led engineering is used as a strategic differentiator.
Harnett currently serves on the board of directors of GLAAD, a non-profit organization. Ms. Harnett holds a BA degree from California State University, Chico and a JD from Santa Clara University School of Law. Logitech International S.A. | Fiscal 2022 Form 10-K | 14 Table of Contents Available Information Our Investor Relations website is located at https://ir.logitech.com.
Harnett holds a BA degree from California State University, Chico and a JD from Santa Clara University School of Law. Available Information Our Investor Relations website is located at https://ir.logitech.com.
Operations Logitech’s operations capability consists of a hybrid model of in-house manufacturing and third-party contract manufacturers, which allows us to effectively respond to rapidly changing demand and leverage economies of scale.
Operations Logitech’s operations capability consists of a hybrid model of in-house manufacturing (including a wholly-owned facility in Suzhou, China) and third-party contract manufacturers (principally in Asia), which allows us to effectively respond to rapidly changing demand, leverage economies of scale, protect intellectual property, and offer high quality production in even the most sophisticated of products.
Revenues from sales to customers in China represented 10% of our sales for fiscal year 2022. No other country represented more than 10% of our sales for fiscal years 2022, 2021 or 2020.
Revenues Logitech International S.A. | Fiscal 2023 Form 10-K | 6 Table of Contents from sales to customers in China represente d 11% a nd 10% of our sales for fiscal year 2023 and 2022, respectively. No other country represented more than 10% of our sales for fiscal years 2023, 2022 or 2021.
Go-To-Market Over the past 30-plus years, Logitech has built an extensive global go-to-market network that can be leveraged as we introduce new products, enter new market categories and optimize the value of our existing products and product categories.
Go-To-Market Logitech has an extensive global go-to-market network that is leveraged to introduce new products, enter new market categories and optimize the value of our existing products and product categories. We have multiple opportunities to drive growth through existing products in existing and new retailers and e-tailers as well as through new products in existing and new retailers and e-tailers.
Enabled with Logitech Flow cross-computer control software, these products represent the new paradigm for precise, fast, comfortable cross-computer digital navigation. • The Logitech Wireless Mouse M325, which offers micro-precise scrolling, an 18-month battery life and comfortable design. • The Logitech Wireless Mouse M185, a wireless mouse with nano receiver technology that is compatible with any computer. • The Logitech Pebble Mouse, a wireless mobility mouse with dual connectivity (BT and unifying nano technology) that is compatible with any computer. • Two recently introduced mice, Logitech Signature Wireless Mouse M650 with Bolt wireless connectivity and the new smart wheel in multiple sizes (large, medium and left hand), and Pop Mouse for younger generations that offers more style at the desk.
Logitech International S.A. | Fiscal 2023 Form 10-K | 4 Table of Contents • The Logitech Wireless Mouse M650, which offers a new precise scrolling wheel, an 18-month battery life, Logi Bolt connectivity compatible with any operating system, side-buttons and comfortable design, and is available in Large, Medium and left-handed versions with sustainable materials. • The Logitech Wireless Mouse M185, a wireless mouse with nano receiver technology that is compatible with any computer. • The Logitech Pebble Mouse, a wireless mobility mouse with dual connectivity (BT and unifying nano technology) that is compatible with any computer. • Two recently introduced mice, Logitech Lift vertical mouse with Logi Bolt wireless technology and the new smart wheel available in right and left-handed version, and Pop Mouse for younger generations that offers more style at the desk.
Within China, there is also a mail-in center to provide these services for more remote locations in China. Manufacturing Logitech's manufacturing operations consist principally of final assembly and testing. Since 1994, we have had our own manufacturing operations in Suzhou, China, which currently handles approximately half of our total production of products.
For our Video Collaboration category, we also work with channel partners to offer bundled support services with Logitech Video Collaboration solutions. Manufacturing Logitech's manufacturing operations consist principally of final assembly and testing. Since 1994, we have had our own manufacturing operations in Suzhou, China, which currently handles approximately 40% of our total production of products.
As a member of the Responsible Business Alliance (“RBA”) and the Responsible Minerals Initiative, we participate in the industry-wide Conflict-Free Sourcing Initiative and its Responsible Minerals Assessment Program (“RMAP”). The RMAP standards are developed to meet the requirements of the OECD Due Diligence Guidance, the Regulation (EU) 2017/821 of the European Parliament and the U.S.
As a member of the Responsible Business Alliance (“RBA”) and the Responsible Minerals Initiative ("RMI"), we participate in the industry-wide Conflict-Free Sourcing Initiative and its Responsible Minerals Assessment Program (“RMAP”).
Our talent development program includes a dedicated training center at our production facility, a number of workshop-based, Logitech International S.A. | Fiscal 2022 Form 10-K | 13 Table of Contents leadership development, mentorship, coaching career development and team building programs that remain available remotely. Information About Our Executive Officers.
Our talent development program includes a dedicated training center at our production facility, a number of workshop-based, leadership development, mentorship, coaching career development and team building programs that remain available remotely. Information About Our Executive Officers. The following sets forth certain information regarding our executive officers as of May 17, 2023 : Name Age Nationality Position Bracken Darrell 60 U.S.
General Counsel and Corporate Secretary Bracken Darrell joined Logitech as President in April 2012 and became Chief Executive Officer in January 2013. Prior to joining Logitech, Mr. Darrell served as President of Whirlpool EMEA and Executive Vice President of Whirlpool Corporation, a home appliance manufacturer and marketing company, from January 2009 to March 2012. Previously, Mr.
Darrell served as President of Whirlpool EMEA and Executive Vice President of Whirlpool Corporation, a home appliance manufacturer and marketing company, from January 2009 to March 2012. Previously, Mr. Darrell had been Senior Vice President, Operations of Whirlpool EMEA from May 2008 to January 2009. From 2002 to May 2008, Mr.
Darrell had been Senior Vice President, Operations of Whirlpool EMEA from May 2008 to January 2009. From 2002 to May 2008, Mr. Darrell was with the Procter & Gamble Company ("P&G"), a consumer brand company, most recently as the President of its Braun GmbH subsidiary. Prior to rejoining P&G in 2002, Mr.
Darrell was with the Procter & Gamble Company ("P&G"), a consumer brand company, most recently as the President of its Braun GmbH subsidiary. Prior to rejoining P&G in 2002, Mr. Darrell served in various executive and managerial positions with General Electric Company from 1997 to 2002, with P&G from 1991 to 1997, and with PepsiCo Inc. from 1987 to 1989.
We utilize our adherence to the RBA code of conduct and transparently report our programs to identify and eradicate slavery and human trafficking in global supply chains. Climate & Carbon: Our operations, supply chain and products are not currently subject to carbon pricing or other legally required carbon taxation or penalties.
Climate & Carbon: Our operations, supply chain and products are not currently subject to carbon pricing or other legally required carbon taxation or penalties.
The effects on Logitech's business of complying with these environmental regulations currently are limited to the cost of agency fees and testing, as well as the time required to obtain agency approvals.
The effects on Logitech's business of complying with these environmental regulations currently are limited to the cost of agency fees and testing required to obtain agency approvals. The costs and schedule requirements are industry requirements and therefore do not represent an undue burden relative to Logitech's competitive position. Seasonality Our product sales are typically seasonal.
Our customer service and technical personnel in each of our regions provide support services to retail purchasers of products through telephone, e-mail, forums, chat, and the Logitech Support website. For some of our brands, dedicated support websites, dedicated internal support teams and channels are available.
Outsourced locations include the Philippines, the United Kingdom, Japan, Bulgaria and China, and inhouse support is primarily located in the United States and India with several other locations in each region. Our customer service and technical personnel in each of our regions provide support services to retail purchasers of products through telephone, e-mail, forums, chat, and the Logitech Support website.
Fiscal year 2022 included sales of remaining Harmony products in inventory. We continue to sell our Circle home security cameras within the Smart Home product category. Research and Development We recognize that continued investment in product research and development is critical to facilitate innovation of new and improved products, technologies and experiences.
Research and Development We recognize that continued investment in product research and development is critical to facilitate innovation of new and improved products, technologies and experiences. Our research and development expenses for fiscal years 2023, 2022 and 2021 were $280.8 million , $291.8 million and $226.0 million, respectively.
Our engineering team has expertise in developing products for a broad array of platforms such as PCs, mobile and personal voice assistants (such as Amazon Alexa and Google Assistant). These engineering capabilities combined with our award-winning design team form the basis of Logitech's key innovation engine.
Our engineering team has expertise in bringing together these many technologies, across hardware and software to develop an innovative portfolio. These engineering capabilities combined with our award-winning design team form the basis of Logitech's key innovation engine.
To improve our customers' experience and operate efficiently, we use technology to facilitate chatbot interactions, enable self-help and apply Artificial Intelligence to optimize support searches. Logitech provides warranties on our branded products that range from one to five years. For our Video Collaboration category, we also work with channel partners to offer bundled support services with Logitech Video Collaboration solutions.
For some of our brands, dedicated support websites and dedicated internal support teams are available. To improve our customers' experience and operate efficiently, we use technology to facilitate chatbot interactions, enable self-help and apply Artificial Intelligence to optimize support searches.
From time to time, we may seek to partner with or acquire, when appropriate, companies that have products, personnel, and technologies that complement our strategic direction. For more information, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 3—Business Acquisitions in our Notes to consolidated financial statements.
This includes direct sales to retailers, e-tailers, and end consumers through our e-commerce platform, and indirect sales to end customers through distributors. From time to time, we may seek to partner with or acquire, when appropriate, companies that have products, personnel, and technologies that complement our strategic direction.
Darrell served in various executive and managerial positions with General Electric Company from 1997 to 2002, with P&G from 1991 to 1997, and with PepsiCo Inc. from 1987 to 1989. Mr. Darrell holds a BA degree from Hendrix College and an MBA from Harvard University.
Mr. Darrell holds a BA degree from Hendrix College and an MBA from Harvard University. Charles Boynton joined Logitech as Chief Financial Officer in February 2023. Prior to joining Logitech, Mr. Boynton served as the Executive Vice President, Chief Financial Officer of Plantronics, Inc.
Some of our key products in this category include: Logitech International S.A. | Fiscal 2022 Form 10-K | 5 Table of Contents • The Logitech MX Master 3 and MX Anywhere 3 wireless mice, our flagship wireless mouse products.
Some of our key products in this category include: • The Logitech MX Master 3 and MX Anywhere 3 wireless mice, our flagship wireless mouse products. Enabled with Logitech Flow cross-computer control software and Logi Bolt cross-operating system connectivity, these products represent the new paradigm for precise, fast, comfortable cross-computer digital navigation and digital creativity.
Removed
ITEM 1. BUSINESS Company Overview Logitech is a world leader in designing, manufacturing and marketing products that help connect people to digital and cloud experiences.
Added
ITEM 1. BUSINESS Company Overview Founded in 1981, and headquartered in Lausanne, Switzerland, Logitech International is a Swiss public company listed on the SIX Swiss Exchange (LOGN) and on the Nasdaq Global Select Market (LOGI). Logitech’s website address is www.logitech.com.
Removed
Forty years ago, Logitech created products to improve experiences around the personal computer ("PC") platform, and today it is a multi-brand, multi-category company designing products that enable people to pursue their passions and connect to the world.
Added
Logitech’s mission is to help all people pursue their passions in a way that is good for people and the planet. We design, manufacture and sell products that help businesses thrive and bring people together when working, creating, gaming and streaming.
Removed
Logitech’s products align with several large secular trends including work and learn from anywhere, video everywhere, the increasing popularity of gaming as a spectator and participant sport, and the democratization of content creation. Logitech's brands include Logitech, Logitech G, ASTRO Gaming, Streamlabs, Blue Microphones and Ultimate Ears. Our Company's website is www.logitech.com.
Added
We sell these products through a number of brands: Logitech, Logitech G (including ASTRO Gaming, Streamlabs, and Blue Microphones) and Ultimate Ears.
Removed
Logitech was founded in Switzerland in 1981, and Logitech International S.A. has been the parent holding company of Logitech since 1988.
Added
Our diverse portfolio includes: • Creativity & Productivity: personal computer ("PC") mice and presentation tools (reported as Pointing Devices), PC keyboards and keyboard/mouse combination products (reported as Keyboards & Combos), PC-based webcams including streaming cameras (reported as PC Webcams), and tablet keyboards and styluses (reported as Tablet & Other Accessories); • Gaming: gaming mice, keyboards, headsets, steering wheels and other control devices, and Streamlabs services; • Video Collaboration: conference cameras for meeting rooms, webcams and headsets; • Music-related products include wireless speakers (reported as Mobile Speakers), and PC speakers, headsets, microphones and earphones (reported as Audio & Wearables).
Removed
Logitech International S.A. is a Swiss holding company with its registered office in Hautemorges, Switzerland, which conducts its business through subsidiaries in the Americas (including North and South America), EMEA (Europe, Middle East, Africa) and Asia Pacific (including, among other countries, China, Taiwan, Japan, India and Australia).
Added
These products are all classified under a single operating segment: Peripherals (see Note 15 to our consolidated financial statements). They also are compatible with many cloud or cloud-based services: video conferencing platforms (e.g. Zoom, Microsoft Teams, Google Meet); esports or video games (e.g. League of Legends, Call of Duty, Valorant); music streaming platforms (e.g.
Removed
Shares of Logitech International S.A. are listed on both the SIX Swiss Exchange, under the trading symbol LOGN, and the Nasdaq Global Select Market, under the trading symbol LOGI. References in this Annual Report on Form 10-K to the "Company," "Logitech," "we," "our," and "us" refer to Logitech International S.A. and its consolidated subsidiaries.

… 72 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

97 edited+33 added−49 removed120 unchanged
Biggest changeThere are risks inherent in doing business in international markets, including: • Difficulties in staffing and managing international operations; • Compliance with increasing amounts of laws and regulations, including environmental, tax, import/export and anti-corruption laws, which vary from country to country, and the European Union legislation, and over time, increasing the costs of compliance and potential risks of non-compliance; • Varying laws, regulations and other legal protections, uncertain and varying enforcement of those laws and regulations, dependence on local authorities, and the importance of local networks and relationships; • Varying accounting, auditing and financial reporting standards, accountability and protections, including risks related to the lack of access by the Public Company Accounting Oversight Board (United States) ("PCAOB") to inspect PCAOB-registered accounting firms in emerging market countries such as China; Logitech International S.A. | Fiscal 2022 Form 10-K | 26 Table of Contents • Exposure to political and financial instability, especially with the uncertainty associated with the ongoing sovereign debt crisis in certain Euro zone countries and the stability of the European Union, which may lead to reduced sales, currency exchange losses and collection difficulties or other losses; • Political and economic uncertainty around the world.
Biggest changeThere are risks inherent in doing business in international markets, including: • Difficulties in staffing and managing international operations; • Compliance with increasing amounts of laws and regulations, including environmental, tax, import/export and anti-corruption laws, which vary from country to country, and the European Union legislation, and over time, increasing the costs of compliance and potential risks of non-compliance; • Varying laws, regulations and other legal protections, uncertain and varying enforcement of those laws and regulations, dependence on local authorities, and the importance of local networks and relationships; • Varying accounting, auditing and financial reporting standards, accountability and protections, including risks related to the lack of access by the Public Company Accounting Oversight Board (United States) ("PCAOB") to inspect PCAOB-registered accounting firms in emerging market countries such as China; • Exposure to political, economic and financial instability, including due to the uncertainty associated with the ongoing sovereign debt issues in certain Euro zone countries, which may lead to reduced sales, currency exchange losses and collection difficulties or other losses; Logitech International S.A. | Fiscal 2023 Form 10-K | 23 Table of Contents • Import or export restrictions or licensing requirements that could affect some of our products, including those with encryption technology; • Trade protection measures, custom duties, tariffs, import or export duties, and other trade barriers, restrictions and regulations, including recent and ongoing United States - China tariffs and trade restrictions, including China's 2021 Anti-Foreign Sanctions Law; • Lack of infrastructure or services necessary or appropriate to support our products and services; • Effects of the COVID-19 pandemic that may be more concentrated where we operate internationally; • Exposure to fluctuations in the value of local currencies; • Difficulties and increased costs in establishing sales and distribution channels in unfamiliar markets, with their own market characteristics and competition, including entrenched local competition; • Weak protection of our intellectual property rights; • Higher credit risks; • Variations in VAT (value-added tax) or VAT reimbursement; • Imposition of currency exchange controls; • Delays from customs brokers or government agencies; and • A broad range of customs, consumer trends, and more.
Discontinuing products with service components may also cause us to continue to incur expenses to maintain services within the product life cycle or may adversely affect our customer and consumer relationships and brand. Divestitures may also involve warranties, indemnification or covenants that could restrict our business or result in litigation, additional expenses or liabilities.
Discontinuing products with service components may cause us to continue to incur expenses to maintain services within the product life cycle or may adversely affect our customer and consumer relationships and brand. Divestitures may also involve warranties, indemnification or covenants that could restrict our business or result in litigation, additional expenses or liabilities.
For example, the General Data Protection Regulation ("GDPR"), which is applicable to us and to all companies processing data of people in the European Union, imposes significant fines and sanctions for violation of the Regulation. Compliance with the GDPR's international transfer rules has been made more difficult by the invalidation of the U.S.
For example, the General Data Protection Regulation ("GDPR"), which is applicable to us and to all companies processing data of people in the European Union, imposes significant fines and sanctions for violation of the Regulation. Compliance with the GDPR's international transfer rules has been made more difficult by the invalidation of the European Union-U.S.
Compliance with such requirements could also require additional expenditures by us or our suppliers, which could have a material adverse effect on our business, results of operations, financial condition and cash flows. In addition, ESG reporting and disclosure requirements continue to evolve, with increasing global regulation and heightened investor expectations.
Compliance with such requirements will also require additional expenditures by us or our suppliers, which could have a material adverse effect on our business, results of operations, financial condition and cash flows. In addition, ESG reporting and disclosure requirements continue to evolve, with increasing global regulation and heightened investor expectations.
Our success largely depends on our ability to hire, retain, integrate and motivate sufficient numbers of qualified personnel, including senior leadership. Our strategy and our ability to innovate, design and produce new products, sell products, maintain operating margins and control expenses depend on key personnel that may be difficult to replace.
Our success largely depends on our ability to manage, hire, retain, integrate and motivate sufficient numbers of qualified personnel, including senior leadership. Our strategy and our ability to innovate, design and produce new products, sell products, maintain operating margins and control expenses depend on key personnel that may be difficult to replace.
While our overall distribution relationships are diffuse, in fiscal year 2022 our gross sales were concentrated with three customers - Amazon Inc., Ingram Micro and TD Synnex - and their affiliated entities. We do not have long-term commitments with those customers.
While our overall distribution relationships are diffuse, in fiscal year 2023 and 2022 our gross sales were concentrated with three customers - Amazon Inc., Ingram Micro and TD Synnex - and their affiliated entities. We do not have long-term commitments with those customers.
Our investments may not result in the growth we expect, or when we expect it, for a variety of reasons, including but not limited to, changes in growth trends, evolving and changing market and increasing competition, market opportunities, and product innovation.
Our investments may not result in the growth we expect, or when we expect it, for a variety of reasons, including but not limited to, changes in growth trends, evolving and changing markets and increasing competition, market opportunities, and product innovation.
Our business depends in part on access to third-party platforms or technologies, and if the access is withdrawn, denied, or is not available on terms acceptable to us, or if the platforms or technologies change without notice to us, our business and operating results could be adversely affected.
Our business depends in part on access to third-party platforms or technologies, and if access thereto is withdrawn, denied, or is not available on terms acceptable to us, or if the platforms or technologies change without notice to us, our business and operating results could be adversely affected.
We experience aggressive price competition and other promotional activities from our primary competitors and from less-established brands, including brands owned by retail customers known as house brands.
We also experience aggressive price competition and other promotional activities from our primary competitors and from less-established brands, including brands owned by retail customers known as house brands.
Our share repurchase program and dividend policy may be affected by many factors, including general business and economic conditions, our financial condition and operating results, our views on potential future capital requirements, restrictions imposed in any future debt agreements, the emergence of alternative investment or acquisition opportunities, changes in our business strategy, legal requirements, changes in tax laws, and other factors.
Our share repurchase programs and dividend policy may be affected by many factors, including general business and economic conditions, our financial condition and operating results, our views on potential future capital requirements, restrictions imposed in any future debt agreements, the emergence of alternative investment or acquisition opportunities, changes in our business strategy, legal requirements, changes in tax laws, and other factors.
This information is increasingly subject to legislation, regulations and enforcement in numerous jurisdictions around the world. Global data privacy regulation is increasingly fragmented, with increasing enforcement efforts and penalties. Such fragmentation requires more complex and costly compliance structures, while heightened enforcement increases the cost and reputational risk associated with even minor compliance errors.
The processing of this information is increasingly subject to legislation, regulations and enforcement in numerous jurisdictions around the world. Global data privacy regulation is increasingly fragmented, with increasing enforcement efforts and penalties. Such fragmentation requires more complex and costly compliance structures, while heightened enforcement increases the cost and reputational risk associated with even minor compliance errors.
In addition, because various jurisdictions have different laws and regulations concerning the use, storage and transmission of such information, we may face requirements that pose compliance challenges in existing markets as well as new international markets that we seek to enter.
In addition, because various jurisdictions have different laws and regulations concerning the use, storage, transmission and other processing of such information, we may face requirements that pose compliance challenges in existing markets as well as new international markets that we seek to enter.
Any announcement of termination or suspension of our share repurchase program or dividend may result in a decrease in our share price. The share repurchase program and payment of cash dividends could also diminish our cash reserves that may be needed for investments in our business, acquisitions or other purposes.
Any announcement of termination or suspension of our share repurchase programs or dividend may result in a decrease in our share price. The share repurchase programs and payment of cash dividends could also diminish our cash reserves that may be needed for investments in our business, acquisitions or other purposes.
Premature announcements or leaks of new products, features or technologies may exacerbate some of these risks by reducing the effectiveness of our product launches, reducing sales volumes of current products due to anticipated future products, making it more difficult to Logitech International S.A. | Fiscal 2022 Form 10-K | 18 Table of Contents compete, shortening the period of differentiation based on our product innovation, straining relationships with our partners or increasing market expectations for the results of our new products before we have had an opportunity to demonstrate the market viability of the products.
Premature announcements or leaks of new products, features or technologies may exacerbate some of these risks by reducing the effectiveness of our product launches, reducing sales volumes of current products due to anticipated future products, making it more difficult to Logitech International S.A. | Fiscal 2023 Form 10-K | 16 Table of Contents compete, shortening the period of differentiation based on our product innovation, straining relationships with our partners or increasing market expectations for the results of our new products before we have had an opportunity to demonstrate the market viability of the products.
We primarily sell our products to a network of distributors, retailers and e-tailers (together with our direct sales channel partners). We are dependent on those direct sales channel partners to distribute and sell our products to indirect sales channel partners and ultimately to consumers.
We primarily sell our products to a network of distributors, retailers, e-tailers and enterprise customers (together with our direct sales channel partners). We are dependent on those direct sales channel partners to distribute and sell our products to indirect sales channel partners and ultimately to consumers.
Acquisitions can also lead to large non-cash charges that can have an adverse effect on our results of operations as a result of write-offs for items such as future impairments of intangible assets and goodwill or the recording of share-based compensation.
Acquisitions can also lead to large non-cash charges that can have an adverse effect on our results of operations as a result of write-offs for items such as future impairments of intangible assets and goodwill, restructuring charges, inventory write downs or the recording of share-based compensation.
The collection, storage, transmission, use and distribution of user data could give rise to liabilities and additional costs of operation as a result of laws, governmental regulation and risks of data breaches and security incidents. In connection with our operations, we collect personal data, including that of our consumers.
The collection, storage, transmission, use and distribution of personal data could give rise to liabilities and additional costs of operation as a result of laws, governmental regulation and risks of data breaches and security incidents. In connection with our operations, we collect and otherwise process personal data, including that of our consumers.
A significant portion of our business is conducted in currencies other than the U.S. Dollar. Therefore, we face exposure to movements in currency exchange rates. Our primary exposure to movements in currency exchange rates relates to non-U.S. Dollar-denominated sales and operating expenses worldwide. For fiscal year 2022, approximately 50% of our revenue was in non-U.S. denominated currencies.
A significant portion of our business is conducted in currencies other than the U.S. Dollar. Therefore, we face exposure to movements in currency exchange rates. Our primary exposure to movements in currency exchange rates relates to non-U.S. Dollar-denominated sales and operating expenses worldwide. For fiscal year 2023, approximately 51% of our revenue was in non-U.S. denominated currencies.
Our manufacturing operations in China could be adversely affected by changes in the interpretation and enforcement of legal standards, strains on China’s available labor pool, changes in labor costs and other employment dynamics, high turnover among Chinese employees, infrastructure issues, import-export issues, cross-border intellectual property and technology restrictions, currency transfer restrictions, natural disasters, regional or global pandemics, conflicts or disagreements between China and Taiwan or China and the United States, labor unrest, and other trade customs and practices that are dissimilar to those in the United States and Europe.
Our manufacturing operations in China have been in the past and could in the future be adversely affected by the COVID-19 pandemic, changes in the interpretation and enforcement of legal standards, strains on China’s available labor pool, changes in labor costs and other employment dynamics, high turnover among Chinese employees, infrastructure issues, import-export issues, cross-border intellectual property and technology restrictions, currency transfer restrictions, natural disasters, regional or global pandemics, conflicts or disagreements between China and Taiwan or China and the United States, labor unrest, and other trade customs and practices that are dissimilar to those in the United States and Europe.
The Ordinance, among other things, (a) requires a binding shareholder “say on pay” vote with respect to the compensation of members of our executive management and Board of Directors, (b) generally prohibits the making of severance, advance, transaction premiums and similar payments to members of our executive management and Board of Directors, (c) imposes other restrictive compensation practices, and (d) requires that our articles of incorporation specify various compensation-related matters.
The revised Swiss Corporate Law among other things, (a) requires a binding shareholder “say on pay” vote with respect to the compensation of members of our executive management and Board of Directors, (b) generally prohibits the making of severance, advance, transaction premiums and similar payments to members of our executive management and Board of Directors, (c) imposes other restrictive compensation practices, and (d) requires that our articles of incorporation specify various compensation-related matters.
Concern over climate change may result in new or additional legal, legislative and regulatory requirements to reduce or mitigate the effects of climate change on the environment, which could result in future tax, transportation and other cost increases that could adversely affect our business.
Concerns over climate change have resulted and may in the future result in new or additional legal, legislative and regulatory requirements to reduce or mitigate the effects of climate change on the environment, which could result in future tax, transportation and other cost increases that could adversely affect our business.
Without dividends, the trading price of our shares must appreciate for investors to realize a gain on their investment. Logitech International S.A. | Fiscal 2022 Form 10-K | 34 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Without dividends, the trading price of our shares must appreciate for investors to realize a gain on their investment. Logitech International S.A. | Fiscal 2023 Form 10-K | 31 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Our share repurchase program does not obligate us to repurchase all or any of the dollar value of shares authorized for repurchase. The program could also increase the volatility of the trading price of our shares. Similarly, we are not obligated to pay dividends on our registered shares.
Our share repurchase programs do not obligate us to repurchase all or any of the dollar value of shares authorized for repurchase. The programs could also increase the volatility of the trading price of our shares. Similarly, we are not obligated to pay dividends on our registered shares.
Summary of Risk Factors Risks Related to our Business • If we fail to innovate and develop new products in a timely and cost-effective manner for our new and existing product categories, our business and operating results could be adversely affected. • Our future growth will depend on our diversified product growth opportunities, and if we do not successfully execute on our growth opportunities, or if our growth opportunities are more limited than we expect, our operating results could be adversely affected. • We purchase key components and products from a limited number of sources, and our business and operating results could be adversely affected if supply were delayed or constrained or if there were shortages of required components. • Our principal manufacturing operations and third-party contract manufacturers are located in China and Southeast Asia, which exposes us to risks associated with doing business in that geographic area as well as potential tariffs, adverse trade regulations, adverse tax consequences and pressure to move or diversify our manufacturing locations. • If we do not successfully coordinate the worldwide manufacturing and distribution of our products, we could lose sales. • If we are not able to maintain and enhance our brands, or if our brands or reputation are damaged, our reputation, business and operating results could be adversely affected. • If we do not compete effectively, demand for our products could decline and our business and operating results could be adversely affected. • The full effect of the COVID-19 pandemic is still uncertain and cannot be predicted, and could adversely affect our business, results of operations and financial condition. • We rely on third parties to sell and distribute our products, and we rely on their information to manage our business.
Summary of Risk Factors Risks Related to our Business • If we fail to innovate and develop new products in a timely and cost-effective manner for our new and existing product categories, our business and operating results could be adversely affected. • If we do not successfully execute on our growth opportunities, or if our growth opportunities are more limited than we expect, our operating results and future growth could be adversely affected. • We purchase key components and products from a limited number of sources, and our business and operating results could be adversely affected if supply were delayed or constrained or if there were shortages of required components. • Our principal manufacturing operations and third-party contract manufacturers are located in China and Southeast Asia, which exposes us to risks associated with doing business in that geographic area as well as potential tariffs, adverse trade regulations, adverse tax consequences and pressure to move or diversify our manufacturing locations. • If we do not successfully coordinate the worldwide manufacturing and distribution of our products, we could lose sales and our business and operating results could be adversely affected. • If we are not able to maintain and enhance our brands, or if our brands or reputation are damaged, our reputation, business and operating results could be adversely affected. • If we do not compete effectively, demand for our products could decline and our business and operating results could be adversely affected. • We rely on third parties to sell and distribute our products, and we rely on their information to manage our business.
Risks Related to Global Nature of our Operations and Regulatory Environment • We conduct operations in a number of countries and have invested significantly in growing our sales and marketing activities in China, and the effect of business, legal and political risks associated with international operations could adversely affect us. • Changes in trade policy and regulations in the United States and other countries, including changes in trade agreements and the imposition of tariffs and the resulting consequences, may have adverse impacts on our business, results of operations and financial condition. • Our financial performance is subject to risks associated with fluctuations in currency exchange rates. • We are subject to risks related to our environmental, social and governance activities and disclosures. • As a company operating in many markets and jurisdictions, expanding into new growth categories, and engaging in acquisitions, and as a Swiss, dual-listed company, we are subject to risks associated with new, existing and potential future laws and regulations. • As a result of changes in tax laws, treaties, rulings, regulations or agreements, or their interpretation, of Switzerland or any other country in which we operate, the loss of a major tax dispute or a successful challenge to our operating structure, intercompany pricing policies or the taxable presence of our key subsidiaries in certain countries, or other factors, our effective income tax rates may increase, which could adversely affect our net income and cash flows.
Risks Related to Global Nature of our Operations and Regulatory Environment • Adverse global and regional economic and geopolitical conditions can materially adversely affect our business, results of operations and financial condition. • We conduct operations in a number of countries and have invested significantly in growing our sales and marketing activities in China, and the effect of business, legal and political risks associated with international operations could adversely affect us. • Changes in trade policy and regulations in the United States and other countries, including changes in trade agreements and the imposition of tariffs and the resulting consequences, may have adverse impacts on our business, results of operations and financial condition. • Our financial performance is subject to risks associated with fluctuations in currency exchange rates. • We are subject to risks related to our environmental, social and governance ("ESG") activities and disclosures. • As a company operating in many markets and jurisdictions, expanding into new growth categories, and engaging in acquisitions, and as a Swiss, dual-listed company, we are subject to risks associated with new, existing and potential future laws and regulations. • As a result of changes in tax laws, treaties, rulings, regulations or agreements, or their interpretation, of Switzerland or any other country in which we operate, the loss of a major tax dispute or a successful challenge to our operating structure, intercompany pricing policies or the taxable presence of our key subsidiaries in certain countries, or other factors, our effective income tax rates may increase, which could adversely affect our net income and cash flows. • We maintain cash and cash equivalents at financial institutions and are exposed to credit risk in the event of default by such financial institutions.
If we fail to provide competitive compensation to our employees, it will be difficult to retain, hire and integrate qualified employees and contractors, and we may not be able to maintain and expand our business.
If we fail to provide an attractive working environment and competitive compensation to our employees, it will be difficult to retain, hire and integrate qualified employees and contractors, and we may not be able to maintain and expand our business.
Risks Related to our Global Operations and Regulatory Environment We conduct operations in a number of countries and have invested significantly in growing our sales and marketing activities in China, and the effect of business, legal and political risks associated with international operations could adversely affect us.
We conduct operations in a number of countries and have invested significantly in growing our sales and marketing activities in China, and the effect of business, legal and political risks associated with international operations could adversely affect us.
As a result, our revenues in any quarter depend primarily on orders booked and shipped in that quarter. • A significant portion of our quarterly retail sales typically occurs in the last weeks of each quarter, further increasing the difficulty in predicting quarterly revenues and profitability. • Our sales are impacted by consumer demand and current and future global economic and political conditions, including trade restrictions and tariffs, and can, therefore, fluctuate abruptly and significantly during periods of uncertain economic conditions or geographic distress, as well as from shifts in distributor inventory practices and consumer buying patterns. • We must incur a large portion of our costs in advance of sales orders because we must plan research and production, order components, buy tooling equipment, and enter into development, sales and marketing, and other operating commitments prior to obtaining firm commitments from our customers.
As a result, our revenues in any quarter depend primarily on orders booked and shipped in that quarter. • A significant portion of our quarterly retail sales typically occurs in the last weeks of each quarter, further increasing the difficulty in predicting quarterly revenues and profitability. • Our sales are impacted by consumer demand and current and future global economic and political conditions, including inflation, foreign currency fluctuations, slowdown of economic activity around the world, in part due to rising interest rates, and lower consumer and enterprise spending, trade restrictions and tariffs, and can, therefore, fluctuate abruptly and significantly during periods of uncertain economic conditions or geographic distress, as well as from shifts in distributor inventory practices and consumer buying patterns. • We must incur a large portion of our costs in advance of sales orders because we must plan research and production, order components, buy tooling equipment, and enter into development, sales and marketing, and other operating commitments prior to obtaining firm commitments from our customers.
In addition, our growth, and increased frequency and sophistication of cyber and product security attacks may increase the likelihood of the Company becoming a target of increasingly complex and damaging attacks that substantially disrupt operations and expose sensitive data. Further, the U.S.
In addition, our growth and increased frequency and sophistication of cyber and product security attacks may increase the likelihood of our becoming a target of complex and damaging attacks that substantially disrupt operations and expose sensitive data.
In addition, from time to time we make strategic venture investments in other companies that provide products and services that are complementary to ours. If these investments are unsuccessful, this could have an adverse impact on our results of operations, operating cash flows and financial condition. Product quality issues could adversely affect our reputation, business and operating results.
In addition, from time to time we make strategic venture investments in other companies that provide products and services that are complementary to ours. If these investments are unsuccessful, this could have an adverse impact on our results of operations, operating cash flows and financial condition.
The collection of user data heightens the risk of security breaches and other data security issues related to our IT systems and the systems of third-party data storage and other service and IT providers.
The collection and processing of personal data also heightens the risk of security breaches and other data security issues related to our IT systems and the systems of third-party data storage and other service and IT providers.
If we do not retain or maintain the continuity of our senior leaders or other key employees for any reason, including voluntary or involuntary departure, death or permanent or temporary disability (the risk of which has been underscored during the COVID-19 pandemic), we risk losing institutional knowledge, experience, expertise and other benefits of continuity as well as the ability to attract and retain other key employees.
If we do not retain or maintain the continuity of our senior leaders or other key employees for any reason, including voluntary or involuntary departure, death or permanent or temporary disability, we risk losing institutional knowledge, experience, expertise and other benefits of continuity as well as the ability to attract and retain other key employees.
As a result of changes in tax laws, treaties, rulings, regulations or agreements, or their interpretation, of Switzerland or any other country in which we operate, the loss of a major tax dispute or a successful challenge to our operating structure, intercompany pricing policies or the taxable presence of our key subsidiaries in certain countries, or other factors, our effective income tax rates may increase, which could adversely affect our net income and cash flows.
Logitech International S.A. | Fiscal 2023 Form 10-K | 26 Table of Contents As a result of changes in tax laws, treaties, rulings, regulations or agreements, or their interpretation, of Switzerland or any other country in which we operate, the loss of a major tax dispute or a successful challenge to our operating structure, intercompany pricing policies or the taxable presence of our key subsidiaries in certain countries, or other factors, our effective income tax rates may increase, which could adversely affect our net income and cash flows.
Disruption of our relationship with these channel partners, changes in or issues with their business practices, their failure to provide timely and accurate information, changes in distribution partners, practices or models, conflicts among our channels of distribution, or failure to build and scale our own sales force for certain product categories and enterprise channel partners could adversely affect our business, results of operations, operating cash flows and financial condition. • If we do not accurately forecast market demand for our products, our business and operating results could be adversely affected. • Our business depends in part on access to third-party platforms or technologies, and if the access is withdrawn, denied, or is not available on terms acceptable to us, or if the platforms or technologies change without notice to us, our business and operating results could be adversely affected.
Disruption of our relationship with these channel partners, changes in or issues with their business practices, their failure to provide timely and accurate information, changes in distribution partners, practices or models, conflicts among our channels of distribution, or failure to build and scale our own sales force for certain product categories and enterprise channel partners could adversely affect our business, results of operations, operating cash flows and financial condition. • If we do not accurately forecast market demand for our products, our business and operating results could be adversely affected. • Our business depends in part on access to third-party platforms or technologies, and if access thereto is withdrawn, denied, or is not available on terms acceptable to us, or if the platforms or technologies change without notice to us, our business and operating results could be adversely affected. • Our success largely depends on our ability to manage, hire, retain, integrate and motivate sufficient numbers of qualified personnel, including senior leadership.
Based on our current business model and as we expand into new markets and product categories and acquire companies, businesses and assets, we must comply with a wide variety of laws, standards and other requirements governing, among other things, health and safety, hazardous materials usage, product-related energy consumption, conflict minerals, packaging, recycling, environmental and human rights matters.
As we expand into new markets and product categories and acquire companies, businesses and assets, we must comply with a wide variety of laws, standards and other requirements governing, among other things, health and safety, hazardous materials usage, product-related energy consumption, conflict minerals, packaging, recycling, sustainability, environmental, child labor and human rights matters.
As a result, China may impose countermeasures against government and private entities and/or persons that formulate, implement or comply with any regulation deemed a “discriminatorily restrictive measure.” Penalties may include denial of entry to China, prohibition of doing business in or with China, freezing of assets and “any other necessary measures.” New or increased tariffs could adversely affect more or all of our products.
As a result, China may impose countermeasures against government and private entities and/or persons that formulate, implement or comply with any regulation deemed a Logitech International S.A. | Fiscal 2023 Form 10-K | 24 Table of Contents “discriminatorily restrictive measure.” Penalties may include denial of entry to China, prohibition of doing business in or with China, freezing of assets and “any other necessary measures.” New or increased tariffs could adversely affect more or all of our products.
Any loss of a major partner or distribution channel or other channel disruption could make us more dependent on alternate channels, increase pricing and promotional pressures from other partners and distribution channels, increase our marketing costs, or adversely impact buying and inventory patterns, payment terms or other contractual terms, sell-through or delivery of our products to consumers, our reputation and brand equity, or our market share.
Any loss of a major partner or distribution channel or other Logitech International S.A. | Fiscal 2023 Form 10-K | 19 Table of Contents channel disruption could make us more dependent on alternate channels, increase pricing and promotional pressures from other partners and distribution channels, increase our marketing costs, or adversely impact buying and inventory patterns, payment terms or other contractual terms, sell-through or delivery of our products to consumers, our reputation and brand equity, or our market share.
As a result of the Federal Act on the Tax Reform and AHV Financing (“TRAF”), the canton of Vaud enacted tax reforms on March 10, 2020 that took effect as of January 1, 2020.
As a result of the Federal Act on the Tax Reform and AHV Financing (“TRAF”), the canton of Vaud in Switzerland, where we are incorporated, enacted tax reforms on March 10, 2020 that took effect as of January 1, 2020.
If we do not successfully coordinate the timely manufacturing and distribution of our products, if our manufacturers, distribution logistics providers or transport providers are not able to successfully and timely process our business or if we do not receive timely and accurate information from such providers, and especially if we expand into new product categories or our business grows in volume, we may have an insufficient supply of products to meet customer demand, we could lose sales, we may experience a build-up in inventory, we may incur additional costs, and our financial performance and reporting may be adversely affected.
If we do not successfully coordinate the timely manufacturing and distribution of our products, if our manufacturers, distribution logistics providers or transport providers are not able to successfully and timely process our business or if we do not receive timely and accurate information from such providers, and especially if we expand into new product categories or our business grows in volume, we may have an insufficient supply of products to meet customer demand or experience a build-up in inventory.
As previously disclosed, we have invested significantly in manufacturing facilities in China and Southeast Asia. Given our manufacturing in those countries, and our lack of manufacturing elsewhere, policy or regulations changes in the United States or other countries present particular risks for us.
As previously disclosed, we have invested significantly in manufacturing facilities in China and Southeast Asia. Given our manufacturing principally in those countries, and our lack of manufacturing elsewhere, policy or regulations changes in the United States or other countries present particular risks for us. We are constantly evaluating our manufacturing footprint globally including beyond Asia.
The use of such hedging activities may not offset any, or more than a portion, of the adverse financial effects of unfavorable Logitech International S.A. | Fiscal 2022 Form 10-K | 28 Table of Contents movements in currency exchange rates over the limited time the hedges are in place and do not protect us from long term shifts in currency exchange rates.
The use of such hedging activities may not offset any, or more than a portion, of the adverse financial effects of unfavorable movements in currency exchange rates over the limited time the hedges are in place and do not protect us from long term shifts in currency exchange rates.
Risks Related to our Financial Results • Our operating results are difficult to predict and fluctuations in results may cause volatility in the price of our shares Logitech International S.A. | Fiscal 2022 Form 10-K | 17 Table of Contents • Our gross margins can vary significantly depending on multiple factors, which can result in unanticipated fluctuations in our operating results. • We cannot ensure that our current share repurchase program will be fully utilized or that it will enhance long-term shareholder value.
Risks Related to our Financial Results • Our operating results are difficult to predict and fluctuations in results may cause volatility in the price of our shares. • Our gross margins can vary significantly depending on multiple factors, which can result in unanticipated fluctuations in our operating results. • We cannot ensure that our share repurchase programs will be fully utilized or that it will enhance long-term shareholder value.
Acquisitions could result in difficulties integrating acquired operations, products, technology, internal controls, personnel and management teams and result in the diversion of capital and management’s attention away from other business issues and opportunities. If we fail to successfully integrate Logitech International S.A. | Fiscal 2022 Form 10-K | 25 Table of Contents acquisitions, our business could be harmed.
Acquisitions could result in difficulties integrating acquired operations, products, technology, internal controls, personnel and management teams and result in the diversion of capital and management’s attention away from other business issues and opportunities. If we fail to successfully integrate acquisitions, our business could be harmed.
Our brands and reputation are also dependent on third parties, such as suppliers, manufacturers, distributors, retailers, product reviewers and the media as well as online consumer product reviews, consumer recommendations and referrals. It can take significant time, resources and expense to overcome negative publicity, reviews or perception.
Our brands and reputation are also dependent on third parties, such as suppliers, manufacturers, distributors, retailers, product Logitech International S.A. | Fiscal 2023 Form 10-K | 18 Table of Contents reviewers and the media as well as online consumer product reviews, consumer recommendations and referrals. It can take significant time, resources and expense to overcome negative publicity, reviews or perception.
We could also frustrate our customers and lose shelf space and market share. Our failure to predict low demand for a product can result in excess inventory, lower cash flows and lower margins if we are required to reduce product prices in order to reduce inventories.
Our failure to predict low demand for a product can result in excess inventory, lower cash flows and lower margins if we are required to reduce product prices in order to reduce inventories.
In addition, the third-party platforms or technologies used to Logitech International S.A. | Fiscal 2022 Form 10-K | 24 Table of Contents interact with our product portfolio can be delayed in production or can change without prior notice to us, which can result in our having excess inventory, lower margins, lost investment in time and expense, or lost opportunity cost.
In addition, the third-party platforms or technologies used to interact with our product portfolio can be delayed in production or can change without prior notice to us, which can result in our having excess inventory, lower margins, lost investment in time and expense, or lost opportunity cost.
As a result, fluctuations in currency exchange rates could and have in the past adversely affect our business, operating results and financial condition. Moreover, these exposures may change over time. We are subject to risks related to our environmental, social and governance activities and disclosures.
As a result, fluctuations in currency exchange rates could affect and have in the past adversely affected our business, operating results and financial condition. Moreover, these exposures may change over time. Logitech International S.A. | Fiscal 2023 Form 10-K | 25 Table of Contents We are subject to risks related to our environmental, social and governance ("ESG") activities and disclosures.
In addition, our competitors may offer customers terms and conditions that may be more favorable than our terms and conditions and may require us to take actions to maintain or increase our customer incentive programs, which could impact our revenues and operating margins. We have historically expanded the categories of products we sell and entered new markets.
In addition, our competitors may offer customers terms and conditions that may be more favorable than our terms and conditions and may require us to take actions to maintain or increase our customer incentive programs, which could impact our revenues and operating margins.
The Ordinance, potential future initiatives relating to corporate governance or executive compensation, and Swiss voter sentiment in favor of such regulations may increase our non-operating costs and adversely affect our ability to attract and retain executive management and members of our Board of Directors.
Potential future initiatives relating to corporate governance or executive compensation, and Swiss voter sentiment in favor of such regulations may increase our non-operating costs and adversely affect our ability to attract and retain executive management and members of our Board of Directors. We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the U.S. ("U.S.
Logitech International S.A. | Fiscal 2022 Form 10-K | 19 Table of Contents We purchase key components and products from a limited number of sources, and our business and operating results could be adversely affected if supply were delayed or constrained or if there were shortages of required components.
We purchase key components and products from a limited number of sources, and our business and operating results could be adversely affected if supply were delayed or constrained or if there were shortages of required components. We purchase certain products and key components from a limited number of sources.
In addition, because of the continuing convergence of the markets for computing devices and consumer electronics, we expect greater competition in the future from well-established consumer electronics Logitech International S.A. | Fiscal 2022 Form 10-K | 21 Table of Contents companies in our developing categories as well as in future categories we might enter.
In addition, because of the continuing convergence of the markets for computing devices and consumer electronics, we expect greater competition in the future from well-established consumer electronics companies in our developing categories as well as in future categories we might enter.
In addition, discontinuing product categories, even categories that we consider non-strategic, reduces the size and diversification of our business and causes us to be more dependent on a smaller number of product categories. As we attempt to grow our business in strategic product categories and emerging market geographies, we will consider growth through acquisition or investment.
In addition, discontinuing product categories, even categories that we consider non-strategic, reduces the size and diversification of our business and causes us to be more dependent on a smaller number of product categories.
The majority of our other production is performed by third-party contract manufacturers, including original design manufacturers, in China, Taiwan, Hong Kong, Malaysia, and Vietnam.
We produce approximately 40% of our products at the facilities we own in China. The majority of our other production is performed by third-party contract manufacturers, including original design manufacturers, in China, Taiwan, Hong Kong, Malaysia, Thailand, Mexico, and Vietnam.
In addition, our labor costs could continue to rise as wage rates increase and the available labor pool declines. These conditions could adversely affect our financial results. Logitech International S.A. | Fiscal 2022 Form 10-K | 20 Table of Contents If we do not successfully coordinate the worldwide manufacturing and distribution of our products, we could lose sales.
In addition, our labor costs could continue to rise as wage rates increase and the available labor pool declines. These conditions could adversely affect our financial results. If we do not successfully coordinate the worldwide manufacturing and distribution of our products, we could lose sales and our business and operating results could be adversely affected.
Risks Related to Cyber Security, Privacy, and Intellectual Property • Significant disruptions in, or breaches in security of, our websites or information technology systems could adversely affect our business. • The collection, storage, transmission, use and distribution of user data could give rise to liabilities and additional costs of operation as a result of laws, governmental regulation and risks of data breaches and security incidents. • Claims by others that we infringe their proprietary technology could adversely affect our business. • We may be unable to protect our proprietary rights.
Risks Related to Confidential Information, Cybersecurity, Privacy, and Intellectual Property • Losses or unauthorized access to or releases of confidential information could adversely affect our business and result in significant reputational, financial and legal consequences. • The collection, storage, transmission, use and distribution of personal data could give rise to liabilities and additional costs of operation as a result of laws, governmental regulation and risks of data breaches and security incidents. • Claims by others that we infringe their proprietary technology could adversely affect our business.
Our strategy and our ability to innovate, design and produce new products, sell products, maintain operating margins and control expenses depend on key personnel that may be difficult to replace. • As we focus on growth opportunities, we are divesting or discontinuing non-strategic product categories and pursuing strategic acquisitions and investments, which could have an adverse impact on our business. • Product quality issues could adversely affect our reputation, business and operating results.
Our strategy and our ability to innovate, design Logitech International S.A. | Fiscal 2023 Form 10-K | 14 Table of Contents and produce new products, sell products, maintain operating margins and control expenses depend on key personnel that may be difficult to replace. • As we focus on growth opportunities, we are divesting or discontinuing non-strategic product categories, or pursuing strategic acquisitions and investments, which could have an adverse impact on our business. • As we continue our efforts to lower our costs and improve our operational efficiency, we may not fully realize our goals. • Product quality issues could adversely affect our reputation, business and operating results.
As we do so, we face an increased risk that claims alleging we infringe the patent or other intellectual property rights of others, regardless of the merit of the claims, may increase in number and significance. Infringement claims against us may also increase as the functionality of video, voice, data and conferencing products begin to overlap.
As we do so, we face an increased risk that claims alleging we infringe the patent or other intellectual property rights of others, regardless of the merit of the claims, may increase in number and significance.
Such laws and regulations are typically intended to protect the privacy and security of personal information and its collection, storage, transmission, use and distribution in or from the governing jurisdiction.
Such laws and regulations are typically intended to protect the privacy and security of personal information and its collection, storage, transmission, use, disclosure and other processing.
Nevertheless, our websites and information technology systems have been and could continue to be subject to or Logitech International S.A. | Fiscal 2022 Form 10-K | 30 Table of Contents threatened with, and are susceptible to damage, disruptions or shutdowns due to power outages, hardware failures, structural or operational failures, computer viruses, attacks by computer hackers, other data security issues, telecommunication failures, user error, malfeasance, catastrophes, system or software upgrades, integration or migration, or other foreseeable and unforeseen events.
Nevertheless, our websites and information technology systems have been and could continue to be subject to or threatened with, and are susceptible to damage, disruptions or shutdowns due to power outages, hardware failures, structural or operational failures, computer viruses, ransomware and other malware, attacks by computer hackers and other third parties, employee error or malfeasance, phishing and other means of social engineering, other data security issues, telecommunication failures, user error, employee or contractor negligence or malfeasance, catastrophes, downtime due to system or software upgrades, integration or migration, or other foreseeable and unforeseen events.
We use our forecasts of product demand to make decisions regarding investments of our resources and production levels of our products. Although we receive forecasts from our customers, many are not obligated to purchase the forecasted demand.
If we do not accurately forecast market demand for our products, our business and operating results could be adversely affected. We use our forecasts of product demand to make decisions regarding investments of our resources and production levels of our products. Although we receive forecasts from our customers, many are not obligated to purchase the forecasted demand.
Our future growth will depend on our diversified product growth opportunities, and if we do not successfully execute on our growth opportunities, or if our growth opportunities are more limited than we expect, our operating results could be adversely affected.
If we do not successfully execute on our growth opportunities, or if our growth opportunities are more limited than we expect, our operating results and future growth could be adversely affected. Our future growth depends on growth opportunities and as a result, we are attempting to diversify our product category portfolio.
We also rely on our centralized information technology systems for product-related information and to store intellectual property, forecast our business, maintain financial records, manage operations and inventory, and operate other critical functions. We allocate significant resources to maintain our information technology systems and deploy network security, data encryption, training and other measures to protect against unauthorized access or misuse.
We also rely on our centralized information technology systems for product-related information and to store intellectual property and data, forecast our business, maintain financial records, manage operations and inventory, and operate other critical functions.
As we focus on growth opportunities, we are divesting or discontinuing non-strategic product categories and pursuing strategic acquisitions and investments, which could have an adverse impact on our business. We continue to review our product portfolio and update our non-strategic product categories and products.
Logitech International S.A. | Fiscal 2023 Form 10-K | 21 Table of Contents As we focus on growth opportunities, we are divesting or discontinuing non-strategic product categories, or pursuing strategic acquisitions and investments, which could have an adverse impact on our business. We regularly review our product portfolio and update our non-strategic product categories and products.
While we maintain reserves for reasonably estimable liabilities and purchase liability insurance, our reserves may not be adequate to cover such claims and liabilities and our insurance is subject to deductibles and may not be adequate to cover such claims and liabilities.
Logitech International S.A. | Fiscal 2023 Form 10-K | 22 Table of Contents While we maintain reserves for reasonably estimable liabilities and purchase liability insurance, our reserves may not be adequate to cover such claims and liabilities and our insurance is subject to deductibles and may not be adequate to cover such claims and liabilities.
Because our operating results are difficult to predict, our results may be below the expectations of financial analysts and investors, which could cause the price of our shares to decline. Our gross margins can vary significantly depending on multiple factors, which can result in unanticipated fluctuations in our operating results.
Because our operating results are difficult to predict, our results may be below the expectations of financial analysts and investors, which could cause the price of our shares to decline.
As a consumer electronics company, our websites are an important presentation of our company, identity and brands and an important means of interaction with and source of information for consumers of our products.
In addition, as a consumer electronics company, our websites are an important presentation of our company, identity and brands and an important means of interaction with and source of information for consumers Logitech International S.A. | Fiscal 2023 Form 10-K | 27 Table of Contents of our products.
Such variance may affect our growth, our previous outlook and expectations, and comparisons of our operating results and financial statements between periods. • We are continuously attempting to simplify our organization, to control operating costs through expense and global workforce management, to reduce the complexity of our product portfolio, and to better align costs with our current business as we expand from PC accessories and provide leverage for growth opportunities in accessories and other products and services for creativity and productivity, gaming, video collaboration, mobile devices, music, digital home and other product categories.
Such variance may affect our growth, our previous outlook and expectations, and comparisons of our operating results and financial statements between periods. • We are continuously attempting to simplify our organization, to control operating costs through expense and global workforce management, to reduce the complexity of our product portfolio, and to better align costs with our current business.
Our principal manufacturing operations and third-party contract manufacturers are located in China and Southeast Asia, which exposes us to risks associated with doing business in that geographic area as well as potential tariffs, adverse tax consequences and pressure to move or diversify our manufacturing locations. We produce approximately half of our products at the facilities we own in China.
Logitech International S.A. | Fiscal 2023 Form 10-K | 17 Table of Contents Our principal manufacturing operations and third-party contract manufacturers are located in China and Southeast Asia, which exposes us to risks associated with doing business in that geographic area as well as potential tariffs, adverse trade regulations, adverse tax consequences and pressure to move or diversify our manufacturing locations.
There can be no assurance we will be able to detect and remedy all defects in the hardware and software we sell. Failure to do so could result in product recalls, product liability claims and litigation, product redesign efforts, lost revenue, loss of reputation, and significant warranty and other expenses to remedy.
Failure to do so could result in product recalls, product liability claims and litigation, product redesign efforts, lost revenue, loss of reputation, and significant warranty and other expenses to remedy.
Risks Related to our Financial Results Our operating results are difficult to predict and fluctuations in results may cause volatility in the price of our shares.
Logitech International S.A. | Fiscal 2023 Form 10-K | 29 Table of Contents Risks Related to our Financial Results Our operating results are difficult to predict and fluctuations in results may cause volatility in the price of our shares.
For example, on June 10, 2021, the National People’s Congress Standing Committee of the People’s Republic of China passed China's new Anti-Foreign Sanctions Law. The Anti-Foreign Sanctions Law took immediate effect and allows China to take “retaliatory action” against any “discriminatorily restrictive measures” imposed by foreign countries against Chinese organizations and citizens.
The Anti-Foreign Sanctions Law took immediate effect and allows China to take “retaliatory action” against any “discriminatorily restrictive measures” imposed by foreign countries against Chinese organizations and citizens.
If we do not receive this information on a timely and accurate basis, if this information is not accurate, or if we do not properly interpret this information, our results of operations and financial condition may be adversely affected. If we do not accurately forecast market demand for our products, our business and operating results could be adversely affected.
In addition, we rely on channel inventory data from our sales channel partners. If we do not receive this information on a timely and accurate basis, if this information is not accurate, or if we do not properly interpret this information, our results of operations and financial condition may be adversely affected.
By locating our manufacturing in China and Southeast Asia, we are reliant on third parties to get our products to distributors around the world.
As a result, we could lose sales or incur additional costs which could adversely affect our financial performance. By locating our manufacturing in China and Southeast Asia, we are reliant on third parties to get our products to distributors around the world.
We will evaluate acquisition opportunities that could provide us with additional product or service offerings or with additional industry expertise, assets and capabilities.
As we attempt to grow our business in strategic product categories and emerging market geographies, we evaluate acquisition opportunities that could provide us with additional product or service offerings or with additional industry expertise, assets and capabilities.
Many of these companies, such as Microsoft, Apple, Google, Cisco, Sony, Samsung, Amazon and others, have greater financial, technical, sales, marketing and other resources than we have. Microsoft, Apple, Google and Amazon are leading producers of operating systems, hardware, platforms and applications with which our mice, keyboards, wireless speakers and other products are designed to operate.
Microsoft, Apple, Google and Amazon are leading producers of operating systems, hardware, platforms and applications with which our mice, keyboards, wireless speakers and other products are designed to operate.
For example, on January 1, 2014, subject to certain transitional provisions, the Swiss Federal Council Ordinance Against Excessive Compensation at Public Companies ("Ordinance") became effective in connection with the Minder initiative approved by Swiss voters during 2013.
For example, on January 1, 2023, subject to certain transitional provisions, the revised Swiss Corporate Law incorporating the Swiss Federal Council Ordinance Against Excessive Compensation at Public Companies, became effective.
This process is inherently risky and will result in investments in time and resources for which we do not achieve any return or value. Our growth opportunities and those we may pursue are subject to constant and rapidly changing and evolving technologies and evolving industry standards and may be replaced by new technology concepts or platforms.
Our growth opportunities and those we may pursue are subject to constant and rapidly changing and evolving technologies and evolving industry standards and may be replaced by new technology concepts or platforms.
Logitech International S.A. | Fiscal 2022 Form 10-K | 32 Table of Contents • The COVID-19 pandemic has led to evolving changes in our supply, operations, logistics and related expenses and use patterns and demand for certain of our products that may not recur or be sustainable in future periods, as well as uncertainty in global macroeconomic conditions. • We engage in acquisitions and divestitures, and such activity varies from period to period.
The effectiveness of our marketing and sales efforts is uncertain and it is difficult to predict whether our marketing and sales efforts will result in increased sales. • The COVID-19 pandemic has led to evolving changes in our supply, operations, logistics and related expenses and use patterns and demand for certain of our products that may not recur or be sustainable in future periods. • We engage in acquisitions and divestitures, and such activity varies from period to period.
European Union Privacy Shield and we are now required to put in place additional privacy protective measures for transfer of data of people in the European Union to certain countries outside of the European Economic Area. In the United States, California and Virginia have already adopted privacy laws and other legislations may follow, at states and federal levels.
Privacy Shield and we are now required to put in place additional privacy Logitech International S.A. | Fiscal 2023 Form 10-K | 28 Table of Contents protective measures for transfer of data of people in the European Union to certain countries outside of the European Economic Area. In the United States, several states have adopted broad privacy laws.
We have also paid cash dividends and increased the size of our dividend, each year since fiscal year 2013.
As of March 31, 2023, $505.8 million was available for repurchase under the 2020 repurchase program. We have also paid cash dividends and increased the size of our dividend, each year since fiscal year 2013.

… 99 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

3 edited+1 added−0 removed2 unchanged
Biggest changeITEM 2. PROPERTIES Our headquarters is located in Lausanne, Switzerland, where we occupy approximately 50,500 square feet under a lease that expires in July 2025. Our principal corporate and administrative offices, which includes our headquarters in Lausanne, Switzerland, and corporate offices in Newark, California and Hsinchu, Taiwan, together make up approximately 286,000 square feet of leased space.
Biggest changeITEM 2. PROPERTIES Our headquarters is located in Lausanne, Switzerland, where we occupy approximately 50,500 square feet under a lease that expires in July 2025.
We maintain marketing and channel support offices in approximately 80 locations and over 40 countries, with lease expiration dates from 2022 to 2031. As of March 31, 2022, the majority of our properties are leased; however, we also own some of the manufacturing units and employee dormitories in Suzhou, China, from which we occupy approximately 720,000 square feet.
We maintain marketing and channel support offices in approximately 80 locations and over 40 countries, with lease expiration dates from 2023 to 2033. As of March 31, 2023, the majority of our properties are leased; however, we also own some of the manufacturing units and employee dormitories in Suzhou, China, from which we occupy approximately 720,000 square feet.
Both our Lausanne, Switzerland and Newark, California locations serve our research and development, product marketing, sales management, technical support and administrative functions. Our Hsinchu, Taiwan location serves our mechanical engineering, process engineering, manufacturing support, quality assurance, design, research and development, and administrative functions.
Both our Lausanne, Switzerland headquarters and San Jose, California future location are designed to serve our research and development, product marketing, sales management, technical support and administrative functions. Our Hsinchu, Taiwan location serves our mechanical engineering, process engineering, manufacturing support, quality assurance, design, research and development, and administrative functions.
Added
Our principal corporate and administrative offices, which includes our headquarters in Lausanne, Switzerland, and future corporate offices in San Jose, California (in the process of being relocated from our current corporate offices in Newark, California) and corporate offices in Hsinchu, Taiwan, together make up approximately 250,000 square feet of leased space.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed4 unchanged
Biggest changeAs a result of amendments to Regulation S-K disclosure requirements related to environmental proceedings to which the government is a party and such proceedings involve potential monetary sanctions, we selected the quantitative threshold of $1.0 million.
Biggest changeAs a result of Regulation S-K disclosure requirements related to environmental proceedings to which the government is a party and such proceedings involve potential monetary sanctions, we selected the quantitative threshold of $1.0 million.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

14 edited+0 added−1 removed9 unchanged
Biggest changeThe following tables present certain information related to purchases made by Logitech of its equity securities under its publicly announced share repurchase programs (in thousands, except per share amounts): Weighted Average Price Per Share Remaining Amount that May Yet Be Repurchased under the Program During Fiscal Year Ended Shares Repurchased** CHF (LOGN) USD (LOGI) March 31, 2020 * 1,251 38.91 — $ 137,386 March 31, 2021 1,845 81.35 89.20 $ 85,382 March 31, 2022 4,607 82.15 89.36 $ 423,696 * The 2017 share repurchase program expired in April 2020 and the unused amount was forfeited. ** All shares were repurchased on the SIX in fiscal year 2020.
Biggest changeThe following tables present certain information related to purchases made by Logitech of its equity securities under its publicly announced share repurchase programs (in thousands, except per share amounts): Weighted Average Price Per Share Remaining Amount that May Yet Be Repurchased under the Program During Fiscal Year Ended Shares Repurchased (1) CHF (LOGN) USD (LOGI) March 31, 2021 1,845 81.35 89.20 $ 85,382 March 31, 2022 4,607 82.15 89.36 $ 423,696 March 31, 2023 7,562 52.94 55.25 $ 505,844 (1) In fiscal year 2021, 2022 and 2023, the number of shares repurchased on the SIX was 1.0 million, 3.9 million, and 7.4 million , respectively, and the number of shares repurchased on NASDAQ was 0.9 million, 0.7 million, and 0.2 million, respectively.
On September 8, 2021, Logitech's shareholders approved a cash dividend payment of CHF 147.0 million out of retained earnings to Logitech's shareholders who owned shares on September 21, 2021. Eligible shareholders were paid CHF 0.87 per share ($0.95 per share in U.S. Dollars), totaling $159.4 million in U.S. Dollars on September 22, 2021.
Dollars on September 28, 2022. On September 8, 2021, Logitech's shareholders approved a cash dividend payment of CHF 147.0 million out of retained earnings to Logitech shareholders who owned shares on September 21, 2021. Eligible shareholders were paid CHF 0.87 per share ($0.95 per share in U.S. Dollars), totaling $159.4 million in U.S. Dollars on September 22, 2021.
Logitech International S.A. | Fiscal 2022 Form 10-K | 36 Table of Contents Share Repurchases In fiscal year 2022, the following approved share repurchase program was in place (in thousands): Share Repurchase Program Approved Shares Approved Amounts (1) May 2020 17,311 $ 1,000,000 (1) In April 2021, our Board of Directors approved an increase of $750.0 million of the 2020 share repurchase program, to an aggregate amount of $1.0 billion.
Logitech International S.A. | Fiscal 2023 Form 10-K | 33 Table of Contents Share Repurchases In fiscal year 2023, the following approved share repurchase program was in place (in thousands): Share Repurchase Program Approved Shares Approved Amounts (1) May 2020 17,311 $ 1,500,000 (1) In April 2021, our Board of Directors approved an increase of $750.0 million of the 2020 share repurchase program, to an aggregate amount of $1.0 billion.
Logitech International S.A. | Fiscal 2022 Form 10-K | 37 Table of Contents The following graph compares the cumulative total stockholder return on our shares, the Nasdaq Composite Index, and the S&P 500 Information and Technology Index.
Logitech International S.A. | Fiscal 2023 Form 10-K | 34 Table of Contents The following graph compares the cumulative total stockholder return on our shares, the Nasdaq Composite Index, and the S&P 500 Information and Technology Index.
This amount may vary based on the number of shares outstanding, net of treasury shares, as of the record date for the dividend, but will not exceed approximately CHF 166.5 million (based on our shares currently issued or 173,106,620 shares). This recommendation will be voted on by our shareholders at the Company’s Annual General Meeting in September 2022.
This amount may vary based on the number of shares outstanding, net of treasury shares, as of the record date for the dividend, but will not exceed approximately CHF 183.5 million (based on our shares currently issued or 173,106,620 shares). This recommendation will be voted on by our shareholders at the Company’s 2023 Annual General Meeting.
The graph assumes that $100 was invested in our LOGI shares, the Nasdaq Composite Index and the S&P 500 Information and Technology Index on March 31, 2017 and calculates the annual return through March 31, 2022.
The graph assumes that $100 was invested in our LOGI shares, the Nasdaq Composite Index and the S&P 500 Information and Technology Index on March 31, 2018 and calculates the annual return through March 31, 2023.
In May 2022, the Board of Directors recommended that the Company increase the cash dividend per share for fiscal year 2022 by 10% to approximately CHF 0.96 per share (approximately $1.04 per share based on the exchange rate on March 31, 2022).
In May 2023, the Board of Directors recommended that the Company increase the cash dividend per share for fiscal year 2023 by approximately CHF 0.10 per share to CHF 1.06 per share (approximately $1.16 per share based on the exchange rate on March 31, 2023).
The stock price performance on the following graph is not necessarily indicative of future stock price performance. ________________________________________ *$100 invested on March 31, 2017, in stock or index, including reinvestment of dividends. Fiscal year ending March 31. Copyright© 2022 Standard & Poor's, a division of S&P Global. All rights reserved.
The stock price performance on the following graph is not necessarily indicative of future stock price performance. ________________________________________ *$100 invested on March 31, 2018, in stock or index, including reinvestment of dividends. Fiscal year ending March 31. Copyright© 2023 Standard & Poor's, Inc. Used with permission. All rights reserved.
As of May 4, 2022, there were 173,106,620 shares issued (including 8,422,457 shares held as treasury stock) held by 43,886 holders of record, and the closing price of our shares was CHF 61.32 ($62.71 based on exchange rates on such date) per share on the SIX Swiss Exchange and $65.88 per share as reported by the Nasdaq Global Select Market.
As of May 3, 2023, there were 173,106,620 shares issued (including 14,368,910 shares held as treasury stock) held by 49,807 holders of record, and the closing price of our shares was CHF 55.40 ($61.89 based on exchange rates on such date) per share on the SIX Swiss Exchange and $62.68 per share as reported by the Nasdaq Global Select Market.
Based on our shares outstanding, net of treasury shares, as of March 31, 2022 (165,252,020 shares), this would result in an aggregate gross dividend of approximately CHF 159.0 million (approximately $172.1 million based on the exchange rate on March 31, 2022).
Based on our shares outstanding, net of treasury shares, as of March 31, 2023 (159,343,273 shares), this would result in an aggregate gross dividend of approximately CHF 168.9 million (approximately $184.2 million based on the exchange rate on March 31, 2023).
On September 9, 2020, Logitech's shareholders approved a cash dividend payment of CHF 134.0 million out of retained earnings to Logitech shareholders who owned shares on September 21, 2020. Eligible shareholders were paid CHF 0.79 per share ($0.87 per share in U.S. Dollars), totaling $146.7 million in U.S. Dollars on September 22, 2020.
On September 14, 2022, Logitech's shareholders approved a cash dividend payment of CHF 0.96 per share out of retained earnings to Logitech's shareholders who owned shares on September 27, 2022. Eligible shareholders were paid CHF 0.96 per share ($0.98 per share in U.S. Dollars based on the exchange rate on the date of payment), totaling $158.7 million in U.S.
Total Number of Shares Repurchased Weighted Average Price Paid Per Share Remaining Amount that May Yet Be Repurchased under the Program During the three months ended March 31, 2022 CHF (LOGN) USD (LOGI) Month 1 January 1, 2022 to January 28, 2022 SIX 449 75.01 — $ 508,293 Nasdaq 63 — 82.15 503,093 Month 2 January 29, 2022 to February 25, 2022 SIX 379 72.93 — 473,171 Month 3 February 26, 2022 to March 31, 2022 SIX 652 67.77 — 425,692 Nasdaq 29 — 69.55 423,696 1,572 71.33 77.20 $ 423,696 Performance Graph The information contained in the Performance Graph shall not be deemed to be "soliciting material" or "filed" with the SEC or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), except to the extent that we specifically incorporate it by reference into a document filed under the Securities Act of 1933, as amended (the Securities Act), or the Exchange Act .
Total Number of Shares Repurchased Weighted Average Price Paid Per Share Remaining Amount that May Yet Be Repurchased under the Program During the three months ended March 31, 2023 CHF (LOGN) USD (LOGI) Month 1 January 1, 2023 to January 27, 2023 SIX 644 55.24 — $ 557,808 Month 2 January 28, 2023 to February 24, 2023 SIX 202 53.61 — 546,102 Nasdaq 54 59.00 542,904 Month 3 February 24, 2023 to March 31, 2023 SIX 695 49.11 — 505,844 1,595 52.33 56.68 $ 505,844 Performance Graph The information contained in the Performance Graph shall not be deemed to be "soliciting material" or "filed" with the SEC or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), except to the extent that we specifically incorporate it by reference into a document filed under the Securities Act of 1933, as amended (the Securities Act), or the Exchange Act .
The Swiss Takeover Board approved this increase and it became effective on May 21, 2021.
The Swiss Takeover Board approved this increase and it became effective on May 21, 2021. In July 2022, our Board of Directors approved an increase of $500 million to the 2020 share repurchase program, to an aggregate amount of up to $1.5 billion. The Swiss Takeover Board approved this increase and it became effective on August 19, 2022.
March 31, 2017 2018 2019 2020 2021 2022 Logitech $ 100 $ 117 $ 126 $ 139 $ 341 $ 242 Nasdaq Composite Index $ 100 $ 121 $ 134 $ 135 $ 233 $ 252 S&P 500 Information and Technology Index $ 100 $ 128 $ 147 $ 163 $ 271 $ 328
March 31, 2018 2019 2020 2021 2022 2023 Logitech $ 100 $ 109 $ 121 $ 298 $ 212 $ 171 Nasdaq Composite Index $ 100 $ 111 $ 111 $ 193 $ 209 $ 181 S&P 500 Information and Technology Index $ 100 $ 115 $ 127 $ 212 $ 257 $ 245
Removed
In fiscal year 2021, 969 thousand shares were repurchased on the SIX and 876 thousand shares on NASDAQ. In fiscal year 2022, 3,921 thousand shares were repurchased on the SIX and 686 thousand shares on NASDAQ.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

90 edited+29 added−73 removed34 unchanged
Biggest changeFor additional information, see item 1A " Risk Factors ," including under the caption “We purchase key components and products from a limited number of sources, and our business and operating results could be adversely affected if supply were delayed or constrained or if there were shortages of required components,” “Our principal manufacturing operations and third-party contract manufacturers are located in China and Southeast Asia, which exposes us to risks associated with doing business in that geographic area as well as potential tariffs, adverse tax consequences and pressure to move or diversify our manufacturing locations” and “If we do not accurately forecast market demand for our products, our business and operating results could be adversely affected.” Summary of Financial Results Our total sales for fiscal year 2022 increased 4% compared to fiscal year 2021, primarily driven by growth in sales in Gaming, Keyboards & Combos, and Pointing Devices, partially offset by a decline in sales of Tablet & Other Accessories, Audio & Wearables, and Video Collaboration.
Biggest changeFor additional information, see "Liquidity and Capital Resources" below and Item 1A " Risk Factors ," including under the caption " Adverse global and regional economic and geopolitical conditions can materially adversely affect our business, results of operations and financial condition , " “We purchase key components and products from a limited number of sources, and our business and operating results could be adversely affected if supply were delayed or constrained or if there were shortages of required components,” “Our principal manufacturing operations and third-party contract manufacturers are located in China and Southeast Asia, which exposes us to risks associated with doing business in that geographic area as well as potential tariffs, adverse trade regulations, adverse tax consequences and pressure to move or diversify our manufacturing locations,” “If we do not accurately forecast market demand for our products, our business and operating results could be adversely affected,” and "If we do not successfully coordinate the worldwide manufacturing and distribution of our products, we could lose sales and our business and operating results could be adversely affected.” Trends and Uncertainties Several long-term secular-trends offer long-term structural growth opportunities across Logitech’s product portfolio, including work and learn from anywhere (hybrid work), video everywhere, the rise of social gaming for participants and spectators, and the democratization of digital content creation.
GAAP requires us to make judgments, estimates, and assumptions that affect reported amounts of assets, liabilities, sales and expenses, and the disclosure of contingent assets and liabilities.
GAAP requires us to make assumptions, judgments, and estimates that affect reported amounts of assets, liabilities, sales and expenses, and the disclosure of contingent assets and liabilities.
If we are not successful in launching and phasing in our new products, or market competition increases, or we are not able to sell the new products at the prices planned, it could have a material impact on our sales, gross profit margin, operating results including operating cash flow, and inventory turnover in the future.
If we are not successful in launching and phasing in our new products, or market competition increases, or we are not able to sell the new products at the prices planned, it could have a material impact on our sales, gross margin, operating results including operating cash flow, and inventory turnover in the future.
We do not expect to incur any material adverse tax impact except for what has already been recognized, or to be significantly inhibited by any country in which we do business from the repatriation of funds to Switzerland, our home domicile.
We do not expect to incur any material adverse tax impact except for what has already been recognized, or to be significantly inhibited by any country in which we do business from the repatriation of funds to Switzerland, our country of domicile .
We received final tax assessments in Switzerland through fiscal year 2019. For other material foreign jurisdictions such as the United States and China, we are generally not subject to tax examinations for years prior to fiscal year 2019 and calendar year 2019, respectively.
We received final tax assessments in Switzerland through fiscal year 2019. For other material foreign jurisdictions such as the United States and China, we are generally not subject to tax examinations for years prior to fiscal year 2020 and calendar year 2020, respectively.
In the United States, the federal and state tax agencies have the authority to examine periods prior to fiscal year 2019, to the extent allowed by law, where tax attributes were generated, carried forward, and being utilized in subsequent years. We are under examination in foreign tax jurisdictions.
In the United States, the federal and state tax agencies have the authority to examine periods prior to fiscal year 2020, to the extent allowed by law, where tax attributes were generated, carried forward, and being utilized in subsequent years. We are under examination in foreign tax jurisdictions.
Given our global sales presence and the reporting of our financial results in U.S. Dollars, our financial results could be affected by significant shifts in currency exchange rates. See “Results of Operations” for information on the effect of currency exchange results on our sales. If the U.S.
Given our global sales presence and the reporting of our financial results in U.S. Dollars, our financial results could be affected by significant shifts in currency exchange rates. See “Results of Operations” for information on the effect of currency exchange rate fluctuations on our sales. If the U.S.
We are unable to reasonably estimate the maximum amount that could be payable under these arrangements because these exposures are not capped, the obligations are conditional in nature, and the facts and circumstances involved in any situation that might arise are variable. Logitech International S.A. | Fiscal 2022 Form 10-K | 54 Table of Contents
We are unable to reasonably estimate the maximum amount that could be payable under these arrangements because these exposures are not capped, the obligations are conditional in nature, and the facts and circumstances involved in any situation that might arise are variable. Logitech International S.A. | Fiscal 2023 Form 10-K | 49 Table of Contents
The decrease in investment income for fiscal year 2022 compared to fiscal year 2021 primarily relates to the change in market performance of the underlying securities.
The decrease in investment income for fiscal year 2023 compared to fiscal year 2022 primarily relates to the change in market performance of the underlying securities.
For a discussion of the year ended March 31, 2021 compared to the year ended March 31, 2020, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations " in our Annual Report on Form 10-K filed with the SEC on May 12, 2021.
For a discussion of the year ended March 31, 2022 compared to the year ended March 31, 2021, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K filed with the SEC on May 18, 2022.
Results of Operations In this section, we discuss the results of our operations for the year ended March 31, 2022 compared to the year ended March 31, 2021.
Results of Operations In this section, we discuss the results of our operations for the year ended March 31, 2023 compared to the year ended March 31, 2022.
Dollar, such as the Euro, Chinese Renminbi, Japanese Yen, Australian Dollar, Canadian Dollar, Pound Sterling and New Taiwan Dollar. For the years ended March 31, 2022 and 2021, approximately 50% and 52%, respectively, of our sales were denominated in currencies other than the U.S. Dollar.
Dollar, such as the Euro, Chinese Renminbi, Japanese Yen, Australian Dollar, Canadian Dollar, Pound Sterling and New Taiwan Dollar. For the years ended March 31, 2023 and 2022, approximately 51% and 50%, respectively, of our sales were denominated in currencies other than the U.S. Dollar.
Logitech International S.A. | Fiscal 2022 Form 10-K | 44 Table of Contents References to Sales The term “sales” means net sales, except as otherwise specified and the sales growth discussion and sales growth rate percentages are in U.S. Dollars, except as otherwise specified.
Logitech International S.A. | Fiscal 2023 Form 10-K | 39 Table of Contents References to Sales The term “sales” means net sales, except as otherwise specified and the sales growth discussion and sales growth rate percentages are in U.S. Dollars, except as otherwise specified.
Interest Income Interest income for fiscal years 2022 and 2021 was as follows (in thousands): Years Ended March 31, 2022 2021 Interest Income $ 1,246 $ 1,784 We invest in highly liquid instruments with an original maturity of three months or less at the date of purchase, which are classified as cash equivalents.
Interest Income Interest income for fiscal years 2023 and 2022 was as follows (in thousands): Years Ended March 31, 2023 2022 Interest Income $ 18,331 $ 1,246 We invest in highly liquid instruments with an original maturity of three months or less at the date of purchase, which are classified as cash equivalents.
We recognized excess tax benefits from share-based payments, net of shortfalls of $16.3 million and $8.7 million in the United States in fiscal years 2022 and 2021, respectively, and recognized income tax benefit from the reversal of uncertain tax positions from the expiration of statutes of limitations in the amount of $4.9 million and $4.7 million in fiscal years 2022 and 2021, respectively.
We recognized excess tax benefits from share-based payments, net of shortfalls of $1.3 million and $16.3 million in the United States in fiscal years 2023 and 2022, respectively, and recognized income tax benefit from the reversal of uncertain tax positions from the expiration of statutes of limitations in the amount of $4.3 million and $4.9 million in fiscal years 2023 and 2022, respectively.
Return rights vary by customer and range from just the right to return the defective product to stock rotation rights limited to a percentage of sales approved by management.
Product Returns. We grant limited rights to return products. Return rights vary by customer and range from just the right to return the defective product to stock rotation rights limited to a percentage of sales approved by management.
We recognized $1.5 million and $1.1 million, in interest and penalties related to unrecognized tax positions in income tax expense during fiscal years 2022 and 2021, respectively. As of March 31, 2022 and 2021, we had $3.6 million and $4.9 million, respectively, of accrued interest and penalties related to uncertain tax positions. We file Swiss and foreign tax returns.
We recognized $2.7 million and $1.5 million, in interest and penalties related to unrecognized tax positions in income tax expense during fiscal years 2023 and 2022, respectively. As of March 31, 2023 and 2022, we had $6.1 million and $3.6 million, respectively, of accrued interest and penalties related to uncertain tax positions. We file Swiss and foreign tax returns.
Capitalization and amortization of research and development expenses in the U.S. Pursuant to the Tax Cuts and Jobs Act of 2017, research and development expenses are required to be capitalized and amortized over five years for U.S. tax purposes if the research and development activities are performed in the U.S, effective for tax year beginning after December 31, 2021.
Pursuant to the Tax Cuts and Jobs Act of 2017, research and development expenses are required to be capitalized and amortized over five years for U.S. tax purposes if the research and development activities are performed in the U.S. effective for tax year beginning after December 31, 2021. The provision was effective for us beginning in fiscal year 2023.
As of March 31, 2022 and 2021, the total amount of unrecognized tax benefits due to uncertain tax positions was $176.0 million and $160.3 million, respectively, all of which would affect the effective income tax rate if recognized.
As of March 31, 2023 and 2022, the total amount of unrecognized tax benefits due to uncertain tax positions was $186.8 million and $176.0 million, respectively, all of which would affect the effective income tax rate if recognized.
General and Administrative General and administrative expenses consist primarily of personnel and related overhead, information technology, and facilities costs for the infrastructure functions such as finance, information systems, executives, human resources and legal. During fiscal year 2022, general and administrative expenses decreased $17.9 million, compared to fiscal year 2021.
General and Administrative General and administrative expenses consist primarily of personnel and related overhead, information technology, and facilities costs for the infrastructure functions such as finance, information systems, executives, human resources and legal. During fiscal year 2023, general and administrative expenses decreased $24.0 million, compared to fiscal year 2022, primarily driven by lower personnel-related costs.
For over ten years, we have generated positive cash flows from our operating activities, including cash from operations of $298.3 million, and $1,458.6 million during fiscal years 2022 and 2021, respectively.
For over ten years, we have generated positive cash flows from our operating activities, including cash from operations of $534.0 million and $298.3 million during fiscal years 2023 and 2022, respectively.
Logitech International S.A. | Fiscal 2022 Form 10-K | 41 Table of Contents Business Seasonality and Product Introductions We have historically experienced higher sales in our third fiscal quarter ending December 31, compared to other fiscal quarters in our fiscal year, primarily due to the increased consumer demand for our products during the year-end holiday buying season and year-end spending by enterprises.
Business Seasonality and Product Introductions We have historically experienced higher sales in our third fiscal quarter ending December 31, compared to other fiscal quarters in our fiscal year, primarily due to the increased consumer demand for our products during the year-end holiday buying season and year-end spending by enterprises.
In April 2021, our Board of Directors approved an increase of $750.0 million of the 2020 share repurchase program, to an aggregate amount of $1.0 billion. The Swiss Takeover Board approved this increase and it became effective on May 21, 2021. As of March 31, 2022 , $423.7 million was available for repurchase under the 2020 repurchase program.
In April 2021, our Board of Directors approved an increase of $750.0 million to the 2020 share repurchase program, to an aggregate amount of $1.0 billion. The Swiss Takeover Board approved this increase and it became effective on May 21, 2021.
If we receive a separately identifiable benefit from a customer and can reasonably estimate the fair value of that benefit, the cost of the Customer Programs is recognized in operating expenses. Customer Incentive Programs. Customer incentive programs include performance-based incentives and consumer rebates.
If we receive a separately identifiable benefit from a customer and can reasonably estimate the fair value of that benefit, the cost of the Customer Programs is recognized in operating expenses. Customer Incentive Programs. Customer incentive programs include performance-based incentives and consumer rebates. We offer performance-based incentives to our customers and indirect partners based on pre-determined performance criteria.
We have firm purchase commitments of $29.5 million for capital expenditures, primarily related to commitments for tooling and equipment for new and existing products. We expect to continue making capital expenditures in the future to support product development activities and ongoing and expanded operations.
We have firm purchase commitments of $26.3 million for capital expenditures, primarily related to commitments for tooling and equipment for new and existing products and commitments to vendors to fit out and furnish office facilities. We expect to continue making capital expenditures in the future to support product development activities and ongoing and expanded operations.
Our cash and cash equivalents consist of bank demand deposits and short-term time deposits, of which 70% is held in Switzerland, 12% is held in China (including Hong Kong), and 10% is held in Germany.
Our cash and cash equivalents consist of bank demand deposits and short-term time deposits, of w hich 78% is held in Switzerland and 12% is held in China (including Hong Kong).
Logitech International S.A. | Fiscal 2022 Form 10-K | 51 Table of Contents The following table presents selected financial information and statistics as of March 31, 2022 and 2021 (Dollars in thousands): March 31, 2022 2021 Accounts receivable, net $ 675,604 $ 612,225 Accounts payable $ 636,306 $ 823,233 Inventories $ 933,124 $ 661,116 Days sales in accounts receivable (DSO)(Days) (1) 49 36 Days accounts payable outstanding (DPO) (Days) (2) 78 90 Inventory turnover (ITO)(x) (3) 3.2 5.0 (1) DSO is determined using ending accounts receivable, net as of the most recent quarter-end and sales for the most recent quarter.
Logitech International S.A. | Fiscal 2023 Form 10-K | 46 Table of Contents The following table presents selected financial information and statistics as of March 31, 2023 and 2022 (Dollars in thousands): March 31, 2023 2022 Accounts receivable, net $ 630,382 $ 675,604 Accounts payable $ 406,968 $ 636,306 Inventories $ 682,893 $ 933,124 Days sales in accounts receivable (DSO)(Days) (1) 59 49 Days accounts payable outstanding (DPO) (Days) (2) 59 78 Inventory turnover (ITO)(x) (3) 3.6 3.2 (1) DSO is determined using ending accounts receivable, net as of the most recent quarter-end and sales for the most recent quarter.
Our expenditures for property, plant and equipment during fiscal year 2022 were primarily for tooling and equipment as well as computer hardware and software.
Our expenditures for property, plant and equipment during fiscal year 2023 were primarily for tooling and equipment, building improvements, and computer hardware and software.
Contractual Obligations and Commitments Purchase Commitments As of March 31, 2022, we had non-cancelable purchase commitments of $736.9 million for inventory purchases made in the normal course of business from original design manufacturers, contract manufacturers and other suppliers, the majority of which are expected to be fulfilled during the first two quarters of fiscal year 2023.
Contractual Obligations and Commitments Purchase Commitments As of March 31, 2023, we had non-cancelable purchase commitments of $368.1 million for inventory purchases made in the normal course of business from original design manufacturers, contract manufacturers and other suppliers, the majority of which are expected to be fulfilled within the next 12 months.
Logitech International S.A. | Fiscal 2022 Form 10-K | 47 Table of Contents Gross Profit Gross profit for fiscal years 2022 and 2021 was as follows (Dollars in thousands): Years Ended March 31, 2022 2021 Change Net sales $ 5,481,101 $ 5,252,279 4.4 % Gross profit $ 2,263,006 $ 2,335,735 (3.1) % Gross margin 41.3 % 44.5 % Gross profit consists of sales, less cost of goods sold (which includes materials, direct labor and related overhead costs, costs of manufacturing facilities, royalties, costs of purchasing components from outside suppliers, distribution costs, warranty costs, customer support costs, shipping and handling costs, outside processing costs and write-down of inventories), and amortization of intangible assets.
Gross Profit Gross profit for fiscal years 2023 and 2022 was as follows (Dollars in thousands): Years Ended March 31, 2023 2022 Change Net sales $ 4,538,818 $ 5,481,101 (17.2) % Gross profit $ 1,719,515 $ 2,263,006 (24.0) % Gross margin 37.9 % 41.3 % Gross profit consists of sales, less cost of goods sold (which includes materials, direct labor and related overhead costs, costs of manufacturing facilities, royalties, costs of purchasing components from outside suppliers, distribution costs, warranty costs, customer support costs, shipping and handling costs, outside processing costs and write-down of inventories), and amortization of intangible assets.
We had several uncommitted, unsecured bank lines of credit aggregating to $195.0 million as of March 31, 2022. There are no financial covenants under these lines of credit with which we must comply. As of March 31, 2022, we had outstanding bank guarantees of $25.5 million under these lines of credit.
We had several uncommitted, unsecured bank lines of credit aggregating $181.3 million as of March 31, 2023. There are no financial covenants under these lines of credit with which we must comply. As of March 31, 2023, we had outstanding bank guarantees of $13.6 million under these lines of credit.
In May 2022, the Board of Directors recommended that we pay cash dividends for fiscal year 2022 of CHF 0.96 per share (approximately $1.04 per share b ased on the exchange rate on March 31, 2022).
In May 2023, the B oard of Directors recommended that we pay cash dividends for fiscal year 2023 of CHF 1.06 per share (approximately $1.16 per share based on the exchange rate on March 31, 2023).
I f currency exchange rates had been constant in 2022 and 2021, our constant currency sales growth rate would have remained at 4%. Sales Denominated in Other Currencies Although our financial results are reported in U.S. Dollars, a portion of our sales was generated in currencies other than the U.S.
If currency exchange rates had been constant in fiscal years 2023 and 2022, our sales decline in constant currency would have been 13%. Sales Denominated in Other Currencies Although our financial results are reported in U.S. Dollars, a portion of our sales was generated in currencies other than the U.S.
Video Collaboration market: Video Collaboration Our Video Collaboration category includes Logitech’s ConferenceCams, which combine affordable enterprise-quality audio and high definition 4K video to bring video conferencing to businesses of any size, as well as webcams and headsets that turn any desktop into an instant collaboration space.
Logitech International S.A. | Fiscal 2023 Form 10-K | 41 Table of Contents Video Collaboration market: Video Collaboration Our Video Collaboration category includes Logitech’s conference room cameras, which combine affordable enterprise-quality audio and high definition 4K video to bring video conferencing to businesses of any size, as well as webcams and headsets that turn any desktop into an instant collaboration space.
We continually review our product offerings and our strategic direction in light of our profitability targets, competitive conditions, changing consumer trends and the evolving nature of the interface between the consumer and the digital world.
We continually review our product offerings and our strategic direction in light of our profitability targets, competitive conditions, changing consumer trends and the evolving nature of the interface between the consumer and the digital world. Impacts of Macroeconomic and Geopolitical Conditions on our Business In fiscal year 2023, our business was impacted by adverse macroeconomic and geopolitical conditions.
The decrease in interest income for fiscal year 2022, compared to fiscal year 2021, was primarily driven by the decline in interest rates.
The increase in interest income for fiscal year 2023, compared to fiscal year 2022, was primarily driven by th e increase in interest rates.
Customer incentive programs are considered variable consideration, which we estimate and record as a reduction to revenue at the time of sale based on negotiated terms, historical experiences, forecasted incentives, the anticipated volume of future purchases, and inventory levels in the channel. Product Returns. We grant limited rights to return products.
Consumer rebates are offered from time to time at our discretion for the primary benefit of end-users. Customer incentive programs are considered variable consideration, which we estimate and record as a reduction to revenue at the time of sale based on negotiated terms, historical experiences, forecasted incentives, the anticipated volume of future purchases, and inventory levels in the channel.
The higher personnel spend was driven by increased headcount to support business growth and go-to-market expansion. Research and Development Research and development expenses consist of personnel and related overhead costs for contractors and outside consultants, supplies and materials, equipment depreciation and facilities costs, all associated with the design and development of new products and enhancements of existing products.
Research and Development Research and development expenses consist of personnel and related overhead costs for contractors and outside consultants, supplies and materials, equipment depreciation and facilities costs, all associated with the design and development of new products and enhancements of existing products.
EMEA: The decrease in sales in the EMEA region for fiscal year 2022, compared to fiscal year 2021, was primarily driven by decline in sales of Video Collaboration, Audio & Wearables, and PC Webcams, partially offset by growth in sales of Gaming, Keyboards & Combos, Pointing Devices, and Tablets & Other Accessories.
Asia Pacific: The decrease in sales in the Asia Pacific region for fiscal year 2023, compared to fiscal year 2022, was primarily driven by decreases in sales of Keyboards & Combos, PC Webcams, Audio & Wearables, and Video Collaboration, partially offset by an increase in sales of Gaming.
Logitech International S.A. | Fiscal 2022 Form 10-K | 50 Table of Contents Provision for Income Taxes The provision for income taxes and the effective income tax rate for fiscal years 2022 and 2021 were as follows (Dollars in thousands): Years Ended March 31, 2022 2021 Provision for income taxes $ 131,305 $ 200,863 Effective income tax rate 16.9 % 17.5 % The change in the effective income tax rate between fiscal years 2022 and 2021 was primarily due to the mix of income and losses in the various tax jurisdictions in which we operate.
Provision for Income Taxes The provision for income taxes and effective income tax rates for fiscal years 2023 and 2022 were as follows (Dollars in thousands): Years Ended March 31, 2023 2022 Provision for income taxes $ 98,947 $ 131,305 Effective income tax rate 21.3 % 16.9 % The change in the effective income tax rate between fiscal years 2023 and 2022 was primarily due to the mix of income and losses in the various tax jurisdictions in which we operate.
We record inventories at the lower of cost and net realizable value and record write-downs of inventories that are obsolete or in excess of anticipated demand or net realizable value.
Logitech International S.A. | Fiscal 2023 Form 10-K | 38 Table of Contents We record inventories at the lower of cost and net realizable value and record write-downs of inventories that are obsolete or in excess of anticipated demand or net realizable value.
As of March 31, 2022 and 2021, we had $83.4 million and $59.2 million, respectively, in non-current income taxes payable, including interest and penalties, related to our income tax liability for uncertain tax positions.
Logitech International S.A. | Fiscal 2023 Form 10-K | 45 Table of Contents As of March 31, 2023 and 2022, we had $106.4 million and $83.4 million, respectively, in non-current income taxes payable, including interest and penalties, related to our income tax liability for uncertain tax positions.
For fiscal year 2022, net cash used in financing activities was $606.8 million, resulting from repurchases of our registered shares of $412.0 million, payments of cash dividends of $159.4 million, and tax withholdings related to net share settlements of restricted stock units of $64.2 million, partially offset by proceeds from exercise of stock options and purchase rights of $29.6 million.
For fiscal year 2023, net cash used in financing activities was $583.4 million, resulting from repurchases of our registered shares of $418.3 million, payments of cash dividends of $158.7 million, and tax withholdings related to Logitech International S.A. | Fiscal 2023 Form 10-K | 47 Table of Contents net share settlements of restricted stock units of $29.2 million, partially offset by proceeds from exercise of stock options and purchase rights of $28.8 million.
Amortization of Intangible Assets and Acquisition-Related Costs Amortization of intangible assets included in operating expense and acquisition-related costs during fiscal years 2022 and 2021 were as follows (in thousands): Years Ended March 31, 2022 2021 Amortization of intangible assets $ 16,156 $ 18,489 Acquisition-related costs 791 575 Total $ 16,947 $ 19,064 Amortization of intangible assets consists of amortization of acquired intangible assets, including customer relationships and trademarks and trade names.
Logitech International S.A. | Fiscal 2023 Form 10-K | 43 Table of Contents Amortization of Intangible Assets and Acquisition-Related Costs Amortization of intangible assets included in operating expense and acquisition-related costs during fiscal years 2023 and 2022 were as follows (in thousands): Years Ended March 31, 2023 2022 Amortization of intangible assets $ 11,542 $ 16,156 Acquisition-related costs 301 791 Total $ 11,843 $ 16,947 Amortization of intangible assets consists of amortization of acquired intangible assets, including customer relationships and trademarks and trade names.
Marketing and Selling Marketing and selling expenses consist of personnel and related overhead costs, corporate and product marketing, promotions, advertising, trade shows, technical support for customer experiences and facilities costs. During fiscal year 2022, marketing and selling expenses increased $255.6 million, compared to fiscal year 2021.
Marketing and Selling Marketing and selling expenses consist of personnel and related overhead costs, corporate and product marketing, promotions, advertising, trade shows, technical support for customer experiences and facilities costs. During fiscal year 2023, marketing and selling expenses decreased $216.7 million, compared to fiscal year 2022, primarily driven by our reduction in third-party marketing and advertising spend.
Other Income (Expense), Net Other income and expense for fiscal years 2022 and 2021 was as follows (in thousands): Years Ended March 31, 2022 2021 Investment income related to the deferred compensation plan $ 1,231 $ 5,916 Currency exchange loss, net (4,604) (2,688) Loss on investments, net (1,683) (5,910) Other 5,616 893 Total $ 560 $ (1,789) Investment income related to the deferred compensation plan for fiscal years 2022 and 2021 represents earnings, gains, and losses on marketable securities related to a deferred compensation plan offered by one of our subsidiaries.
Logitech International S.A. | Fiscal 2023 Form 10-K | 44 Table of Contents Other Income (Expense), Net Other income (expense), net for fiscal years 2023 and 2022 was as follows (in thousands): Years Ended March 31, 2023 2022 Investment gain (loss) related to the deferred compensation plan $ (1,961) $ 1,231 Currency exchange loss, net (7,337) (4,604) Loss on investments, net (14,073) (1,683) Non-service cost net pension income (expense) and other 10,093 5,616 Total $ (13,278) $ 560 Investment gain (loss) related to the deferred compensation plan for fiscal years 2023 and 2022 represents earnings, gains, and losses on marketable securities related to a deferred compensation plan offered by one of our subsidiaries.
We make certain estimates and judgments about the application of tax laws, the expected resolution of uncertain tax positions and other matters surrounding the recognition and measurement of uncertain tax benefits.
These differences result in deferred tax assets and liabilities, which are included in the consolidated balance sheet. We make certain estimates and judgments about the application of tax laws, the expected resolution of uncertain tax positions and other matters surrounding the recognition and measurement of uncertain tax benefits.
In fiscal year 2022, we paid a cash dividend of CHF 0.87 per share, or CHF 147.0 million (U.S. Dollar amount of $159.4 million) on an aggregate gross basis, out of fiscal year 2021 retained earnings. In fiscal year 2021, we paid a cash dividend of CHF 0.79 per share, or CHF 134.0 million (U.S.
Dollar amount of $158.7 million based on the exchange rate on the date of payment) out of fiscal year 2022 retained earnings. In fiscal year 2022, we paid a cash dividen d of CHF 0.87 per share, or CHF 147.0 million (U.S. Dollar amount of $159.4 million) out of fiscal year 2021 retained earnings.
Operating Expenses Operating expenses for fiscal years 2022 and 2021 were as follows (Dollars in thousands): Years Ended March 31, 2022 2021 Marketing and selling $ 1,025,899 $ 770,284 % of sales 18.7 % 14.7 % Research and development 291,844 226,023 % of sales 5.3 % 4.3 % General and administrative 148,648 166,577 % of sales 2.7 % 3.2 % Amortization of intangible assets and acquisition-related costs 16,947 19,064 % of sales 0.3 % 0.4 % Impairment of intangible assets 7,000 — % of sales 0.1 % — % Change in fair value of contingent consideration for business acquisition (3,509) 5,716 % of sales (0.1) % 0.1 % Restructuring charges (credits), net 2,165 (54) % of sales — % — % Total operating expenses $ 1,488,994 $ 1,187,610 % of sales 27.2 % 22.6 % The increase in total operating expenses during fiscal year 2022, compared to fiscal year 2021, was mainly due to increases in marketing and selling expenses, research and development expenses, impairment of intangible assets and restructuring charges related to the Jaybird exit, partially offset by decrease in general and administrative expenses and change in fair value of contingent consideration for business acquisition.
Logitech International S.A. | Fiscal 2023 Form 10-K | 42 Table of Contents Operating Expenses Operating expenses for fiscal years 2023 and 2022 were as follows (Dollars in thousands): Years Ended March 31, 2023 2022 Marketing and selling $ 809,182 $ 1,025,899 % of sales 17.8 % 18.7 % Research and development 280,796 291,844 % of sales 6.2 % 5.3 % General and administrative 124,652 148,648 % of sales 2.7 % 2.7 % Amortization of intangible assets and acquisition-related costs 11,843 16,947 % of sales 0.3 % 0.3 % Impairment of intangible assets — 7,000 % of sales N/A 0.1 % Change in fair value of contingent consideration for business acquisition — (3,509) % of sales N/A (0.1) % Restructuring charges, net 34,573 2,165 % of sales 0.8 % — % Total operating expenses $ 1,261,046 $ 1,488,994 % of sales 27.8 % 27.2 % The decrease in total operating expenses during fiscal year 2023, compared to fiscal year 2022, was mainly due to decreases in marketing and selling expenses, partially offset by an increase in restructuring charges.
During fiscal year 2022, Mobile Speakers sale s decreased 14% , compared to fiscal year 2021, primarily due to a decline in sales of most of our Mobile Speaker sub-categories, partially offset by an increase in sales of our Boom 3 speakers.
During fiscal year 2023, Mobile Speakers sale s decreased 25%, compared to fiscal year 2022, primarily due to a decrease in sales of most of our Mobile Speaker sub-categories, partially offset by the sales of our Ultimate Ears Wonderboom 3 mini speakers, introduced in the second quarter of fiscal year 2023.
We recorded a liability for firm, non-cancelable, and unhedged inventory purchase commitments in excess of anticipated demand or net realizable value consistent with our valuation of excess and obsolete inventory. As of March 31, 2022, the liability for these purchase commitments was $46.4 million and is recorded in accrued and other current liabilities in the consolidated balance sheet.
We recorded a liability for firm, non-cancelable, and unhedged inventory purchase commitments in excess of anticipated demand or net realizable value consistent with our valuation of excess and obsolete inventory.
During fiscal year 2022, Pointing Devices sales increased 15%, compared to fiscal year 2021, primarily driven by the increase in sales for cordless and corded mice. Keyboards & Combos Our Keyboards & Combos category comprises PC keyboards, keyboard/mice combo products, and living room keyboards.
Keyboards & Combos Our Keyboards & Combos category comprises PC keyboards and keyboard/mice combo products. During fiscal year 2023, Keyboards & Combos sales decreased 14%, compared to fiscal year 2022, primarily driven by the decrease in sales of our cordless combos and corded PC keyboards, particularly in our low end products.
Sales by Region The following table presents the change in sales by region for fiscal year 2022 compared with fiscal year 2021: 2022 vs. 2021 Sales Growth Rate Sales Growth Rate in Constant Currency Americas 5 % 4 % EMEA (1) — Asia Pacific 10 9 Americas: The increase in sales in the Americas region for fiscal year 2022, compared to fiscal year 2021, was primarily driven by growth in sales of Video Collaboration, Keyboards & Combos, Gaming, and Tablet & Other Accessories, partially offset by declines in sales of Audio & Wearables and Mobile Speakers.
Sales by Region The following table presents the change in sales by region for fiscal year 2023 compared with fiscal year 2022: 2023 vs. 2022 Sales Growth Rate Sales Growth Rate in Constant Currency Americas (17) % (17) % EMEA (25) (17) Asia Pacific (9) (3) Americas: The decrease in sales in the Americas region for fiscal year 2023, compared to fiscal year 2022, was primarily driven by decreases in sales for Gaming, Video Collaboration, PC Webcams and Audio & Wearables.
Logitech International S.A. | Fiscal 2022 Form 10-K | 45 Table of Contents Sales by Product Categories Sales by product categories for fiscal years 2022 and 2021 were as follows (Dollars in thousands): Years Ended March 31, Change 2022 2021 2022 vs. 2021 Pointing Devices $ 781,108 $ 680,907 15 % Keyboards & Combos 967,301 784,488 23 PC Webcams 403,651 439,865 (8) Tablet & Other Accessories 310,123 384,301 (19) Gaming (1) 1,451,883 1,239,005 17 Video Collaboration 997,164 1,044,935 (5) Mobile Speakers 149,782 174,895 (14) Audio & Wearables 401,424 468,776 (14) Smart Home 18,463 34,394 (46) Other (2) 202 713 (72) Total Sales $ 5,481,101 $ 5,252,279 4 % (1) Gaming includes streaming services revenue generated by Streamlabs.
Logitech International S.A. | Fiscal 2023 Form 10-K | 40 Table of Contents Sales by Product Categories Sales by product categories for fiscal years 2023 and 2022 were as follows (Dollars in thousands): Years Ended March 31, Change 2023 2022 2023 vs. 2022 Pointing Devices $ 728,357 $ 781,108 (7) % Keyboards & Combos 836,432 967,301 (14) PC Webcams 227,692 403,651 (44) Tablet & Other Accessories 254,374 310,123 (18) Gaming (1) 1,211,485 1,451,883 (17) Video Collaboration 887,517 997,164 (11) Mobile Speakers 111,649 149,782 (25) Audio & Wearables 274,231 401,424 (32) Other (2) 7,081 18,665 (62) Total Sales $ 4,538,818 $ 5,481,101 (17) % (1) Gaming includes streaming services revenue generated by Streamlabs.
We consider an accounting estimate critical if it: (i) requires management to make judgments and estimates about matters that are inherently uncertain; and (ii) is important to an understanding of our financial condition and operating results. We base our estimates on historical experience and various other factors that we believe to be reasonable under the circumstances.
Logitech International S.A. | Fiscal 2023 Form 10-K | 37 Table of Contents We consider an accounting estimate critical if it: (i) requires management to make judgments and estimates about matters that are inherently uncertain; and (ii) is important to an understanding of our financial condition and operating results.
Sales for fiscal year 2022 increased 5% and 10% in the Americas and Asia Pacific, respectively, and declined 1% in EMEA, compared to fiscal year 2021.
Sales for fiscal year 2023 decreased 25%, 17% and 9% in the EMEA, Americas and Asia Pacific regions, respectively, compared to fiscal year 2022.
As of March 31, 2022, our working capital was $1,651.8 million, compared with working capital of $1,477.5 million as of March 31, 2021. The increase was primarily driven by higher inventories, higher accounts receivable, net, lower accounts payable and lower accrued and other current liabilities, partially offset by lower cash and cash equivalents.
As of Ma rch 31, 2023, our working capital was $1,555.1 million, compared to $1,651.8 million as of March 31, 2022. The decrease was primarily driven by lower inventories, lower cash balances resulting from share repurchases and payments of cash dividends, and lower accounts receivable, net, partially offset by decreases in accounts payable and accrued liabilities.
Included in the income tax provision of $131.3 million and $200.9 million in fiscal year 2022 and 2021 was $88.7 million and $152.6 million, respectively, of tax expense from Switzerland that reflects the post enactment of the Tax Reform and AHV Financing (“TRAF") by the canton of Vaud.
Included in the income tax provision of $98.9 million and $131.3 million in fiscal year 2023 and 2022 was $48.3 million and $88.7 million, respectively, of tax expense from Switzerland.
Based on our shares outstanding, net of treasury shares, as of March 31, 2022 (165,252,020 shares), this would result in an aggregate gross dividend of approximately CHF 159.0 million (or approximately $172.1 million based on the exchange rate on March 31, 2022).
Based on our shares outstanding, net of treasury shares, as of March 31, 2023 (159,343,273 shares), this would result in an aggregate gross dividend of approximately CHF 168.9 million (approximately $184.2 million based on the exchange rate on March 31, 2023). In fiscal year 2023, we paid a cash dividend of CHF 0.96 per share, or CHF 156.1 million (U.S.
During fiscal year 2022, Keyboards & Combos sales increased 23%, compared to fiscal year 2021, driven by increases in sales of cordless and corded keyboards and keyboard/mice combos. PC Webcams Our PC Webcams category comprises PC-based webcams targeted primarily at consumers, including streaming cameras.
PC Webcams Our PC Webcams category comprises PC-based webcams targeted primarily at consumers, including streaming cameras. During fiscal year 2023, PC Webcams sales decreased 44%, compared to fiscal year 2022, primarily driven by the decrease in sales of our HD Pro Webcam C920, 1080p Pro Stream Webcam, and Webcam C260.
DSO as of March 31, 2022 increased by 13 days to 49 days, as compared to 36 days as of March 31, 2021, primarily due to the timing of sales and customer payments within the quarter.
DSO as of March 31, 2023 increased by 10 days to 59 days, as compared to 49 days as of March 31, 2022, primarily due to lower revenues resulting from softened demand, partially offset by timing of sales within the quarter.
Logitech International S.A. | Fiscal 2022 Form 10-K | 53 Table of Contents Although open purchase commitments are considered enforceable and legally binding, the terms generally allow us to reschedule or adjust our requirements based on business needs prior to delivery of goods or performance of services.
Although open purchase commitments are considered enforceable and legally binding, the terms generally allow us to reschedule or adjust our requirements based on business needs prior to delivery of goods or performance of services. Operating Leases Obligation We lease facilities under operating leases, certain of which require us to pay property taxes, insurance and maintenance costs.
The scope of these indemnities varies, but in some instances includes indemnification for damages and expenses, including reasonable attorneys’ fees. As of March 31, 2022, no amounts have been accrued for indemnification provisions.
Indemnifications We indemnify certain suppliers and customers for losses arising from matters such as intellectual property disputes and product safety defects, subject to certain restrictions. The scope of these indemnities varies, but in some instances includes indemnification for damages and expenses, including reasonable attorneys’ fees. As of March 31, 2023, no material a mounts have been accrued for indemnification provisions.
Audio & Wearables Our Audio & Wearables category comprises PC speakers, PC headsets, in-ear headphones, premium wireless audio wearables and studio-quality Blue Microphones for professionals and consumers.
Audio & Wearables Our Audio & Wearables category comprises PC speakers, PC headsets, in-ear headphones, premium wireless earbuds and studio-quality Blue Microphones for professionals and consumers. During fiscal year 2023, Audio & Wearables sales decreased 32%, compared to fiscal year 2022, primarily due to the decrease in sales of almost all sub-categories.
Our worldwide channel network includes consumer electronics distributors, retailers, e-tailers, mass merchandisers, specialty stores, computer and telecommunications stores, value-added resellers and online merchants. We primarily sell our services directly to end customers. From time to time, we may seek to partner with or acquire, when appropriate, companies that have products, personnel, and technologies that complement our strategic direction.
We sell our products to a broad network of international customers, including direct sales to retailers, e-tailers, and end consumers through our e-commerce platform, and indirect sales to end customers through distributors. From time to time, we may seek to partner with or acquire, when appropriate, companies that have products, personnel, and technologies that complement our strategic direction.
The decrease in amortization of intangible assets and acquisition-related costs from fiscal year 2021 to 2022 was primarily driven by write-off Jaybird intangible assets in fiscal year 2022, partially offset by full year of amortization in fiscal year 2022 for intangible assets acquired through acquisitions completed in the fourth quarter of fiscal year 2021.
Acquisition-related costs include legal expense, due diligence costs, and other professional costs incurred for business acquisitions. The decrease in amortization of intangible assets and acquisition-related costs from fiscal year 2022 to 2023 was primarily due to certain acquired intangible assets becoming fully amortized and the write-off of Jaybird intangible assets in fiscal year 2022.
Logitech International S.A. | Fiscal 2022 Form 10-K | 52 Table of Contents During fiscal year 2022, there was a $5.2 million loss from currency exchange rate effect on cash and cash equivalents, primarily due to the weakening of the Euro and Australian dollar versus the U.S. Dollar by 3%, and 5%, respectively.
During fiscal year 2023 , there was a $24.6 million loss from currency exchange rate effect on cash and cash equivalents, primarily due to exchange rate fluctuations of Euro, Swiss Franc, Chinese Renminbi, and Australian Dollar versus the U.S. Dollar and timing of our cash transactions over the period.
The future impact of COVID-19 cannot be predicted with certainty and may increase our costs of capital and otherwise adversely affect our business, results of operations, financial condition and liquidity.
Market volatility driven by the current macroeconomic and geopolitical environment may increase our costs of capital and otherwise adversely affect our business, results of operations, financial condition and liquidity.
During fiscal year 2022, Gaming sales increased 17%, compared to fiscal year 2021, primarily driven by strong performance in nearly all of our Gaming sub-categories, including our gaming mice, gaming steering wheels, and gaming headsets, partially offset by a decline in the sales of our console gaming headsets and console gaming controllers.
Gaming market: Gaming Our Gaming category comprises gaming mice, keyboards, headsets, gamepads, steering wheels, simulation controllers, console gaming headsets, and Streamlabs services. During fiscal year 2023, Gaming sales decreased 17%, compared to fiscal year 2022, primarily driven by the decrease in sales of gaming mice, keyboards, and headsets.
If the examinations are resolved unfavorably, there is a possibility that they may have a material negative impact on our results of operations. Liquidity and Capital Resources Cash Balances, Available Borrowings, and Capital Resources As of March 31, 2022, we had cash and cash equivalents of $1,328.7 million, compared with $1,750.3 million as of March 31, 2021.
If the examinations are resolved unfavorably, there is a possibility that they may have a material negative impact on our results of operations.
For additional information about our Critical Accounting Estimates, see Note 2—Summary of Significant Accounting Policies in our Notes to our consolidated financial statements below. Adoption of New Accounting Pronouncements Refer to Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K for recent accounting pronouncements adopted and to be adopted.
Such adjustments may have a material impact on our income tax provision and our results of operations. For additional information about our Critical Accounting Estimates, see Note 2—Summary of Significant Accounting Policies in our Notes to our consolidated financial statements below.
Operating Leases Obligation We lease facilities under operating leases, certain of which require us to pay property taxes, insurance and maintenance costs. Operating leases for facilities are generally renewable at our option and usually include escalation clauses linked to inflation . The remaining terms of our non-cancelable operating leases expire in various years through 2031.
Operating leases for facilities are generally renewable at our option and usually include escalation clauses linked to inflation . The remaining terms of our non-cancelable operating leases expire in various years thro ugh 2033. See Note 17 - Leases in our Notes to the consolidated financial statements included in this report for more information on leases.
The loss for fiscal year 2022 was primarily related to the strengthening of the Chinese Renminbi against the U.S. Dollar. Loss on investments, net, represents the realized gain (loss) on sales of investment, unrealized gain (loss) from the fair value change of investment and gain (loss) on equity-method investments during the periods presented.
Loss on investments, net, includes unrealized gain (loss) from the fair value change of investment, gain (loss) on equity-method investments and impairment of investments during the periods presented, as applicable.
During fiscal year 2022, Tablet & Other Accessories sales decreased 19%, compared to fiscal year 2021, primarily driven by decline in sales of Rugged Folio and Slim Folio Products, partially offset by sales of Combo Touch for iPad Pro 12.9-inch, introduced in the second quarter of fiscal year 2022, Combo Touch for iPad Pro 11-inch and Combo Touch for iPad Air, introduced in the first quarter of fiscal year 2022.
Tablet & Other Accessories Our Tablet & Other Accessories category primarily comprises tablet keyboards and styluses. During fiscal year 2023, Tablet & Other Accessories sales decreased 18%, compared to fiscal year 2022, primarily driven by the decrease in sales of most of our products, partially offset by increases in sales of our Rugged Combo 3 Touch.
In May 2020, our Board of Directors approved a new share repurchase program, which authorizes us to invest up to $250.0 million to purchase our own shares, following the expiration date of the 2017 share repurchase program.
In fiscal year 2021, we paid a cash dividend of CHF 0.79 per share, or CHF 134.0 million (U.S. Dollar amount of $146.7 million) out of fiscal year 2020 retained earnings. In May 2020, our Board of Directors approved the 2020 share repurchase program, which authorized us to invest up to $250.0 million to purchase our own shares.
Gross margin decreased by 320 basis points to 41.3% during fiscal year 2022, compared to fiscal year 2021. The decrease in gross margin was primarily due to increased promotional spending, higher reserves for excess inventories, higher material costs and logistic costs, partially offset by favorable impacts from a shift in product mix and currency exchange rates.
Gross margin decreased by 340 basis points to 37.9% during fiscal year 2023, compared to fiscal year 2022. The decrease in gross margin was primarily due to inflationary pressure on costs and unfavorable impacts from changes in currency exchange rates, partially offset by a reduction in our use of expedited shipping.
Price increases may not successfully offset cost increases or may cause us to lose market share and in turn adversely impact our operations. In the fourth quarter of fiscal year 2022, we indefinitely ceased all sales and shipments to Russia. Our sales in Ukraine have also been halted due to the ongoing military operations on the Ukrainian territory.
We had no revenue in Russia and Ukraine in fiscal year 2023 as we have indefinitely ceased all sales and shipments to Russia and sales in Ukraine have also been halted due to the ongoing military operations on the Ukrainian territory. The global and regional economic and political conditions adversely affect demand for our products.
Although these estimates are based on management's best knowledge of current events and actions that may impact us in the future, actual results could differ from those estimates. Management has discussed the development, selection and disclosure of these critical accounting estimates with the Audit Committee of the Board of Directors.
Management has discussed the development, selection and disclosure of these critical accounting estimates with the Audit Committee of the Board of Directors.
S ee Note 17 - Leases in our Notes to the consolidated financial statements included in this report for more information on leases. Income Taxes Payable As of March 31, 2022, we had $83.4 million in non-current income taxes payable, including interest and penalties, related to our income tax liability for uncertain tax positions.
Income Taxes Payable As of March 31, 2023, we had $106.4 million in non-current income taxes payable, including interest and penalties, related to our income tax liability for uncertain tax positions. At this time, we are unable to make a reasonably reliable estimate of the timing of payments in individual years in connection with these tax liabilities.
Gross margin for fiscal year 2022 decreased by 320 basis points to 41.3%, compared to fiscal year 2021, due to increased promotional spending, higher reserves for excess inventories, and higher material and logistic costs, partially offset by favorable impacts from product mix and changes in currency exchange rates.
Gross margin for fiscal year 2023 decreased by 340 basis points to 37.9%, compared to fiscal year 2022, primarily due to inflationary pressure on costs and unfavorable impacts from changes in currency exchange rates, partially offset by a reduction in our use of expedited shipping.

… 112 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−0 removed9 unchanged
Biggest changeThe adverse effect as of March 31, 2022 and 2021 is after consideration of the offsetting effect of approximately $15.9 million and $12.4 million, respectively, from foreign exchange contracts in place as of such dates. We enter into cash flow hedge contracts to protect against exchange rate exposure of forecasted inventory purchases. These hedging contracts mature within four months.
Biggest changeThe adverse effect as of March 31, 2023 and 2022 is after consideration of the offsetting effect of approximately $8.1 million and $15.9 million, respectively, from foreign exchange contracts in place as of such dates. We enter into cash flow hedge contracts to protect against exchange rate exposure of forecasted inventory purchases. These hedging contracts mature within approximately four months.
We enter into currency forward and swap contracts to reduce the short-term effects of currency fluctuations on certain receivables or payables denominated in currencies other than the functional currencies of our subsidiaries. These contracts generally mature within one month. The gains or losses on these contracts are recognized in earnings based on the changes in fair value.
We enter into currency forward and swap contracts to reduce the short-term effects of currency fluctuations on certain receivables or payables denominated in currencies other than the functional currencies of our subsidiaries. These contracts generally mature within approximately one month. The gains or losses on these contracts are recognized in earnings based on the changes in fair value.
If an adverse 10% foreign currency exchange rate change had been applied to total monetary assets and liabilities denominated in currencies other than the functional currencies at the balance sheet dates, it would have resulted in an adverse effect on income before income taxes of approximately $24.4 million and $37.8 million as of March 31, 2022 and 2021, respectively.
If an adverse 10% foreign currency exchange rate change had been applied to total monetary assets and liabilities denominated in currencies other than the functional currencies at the balance sheet dates, it would have resulted in an adverse effect on income before income taxes of approximately $17.0 million and $24.4 million as of March 31, 2023 and 2022, respectively.
If the U.S. dollar had weakened by 10%, the amount recorded in AOCI related to our foreign exchange contracts before tax effect as of March 31, 2022 and 2021 would have been approximately $12.5 million and $16.5 million lower, respectively.
If the U.S. dollar had weakened by 10%, the amount recorded in AOCI related to our foreign exchange contracts before tax effect as of March 31, 2023 and 2022 would have been approximately $7.3 million and $12.5 million lower, respectively.
We transact business in over 30 currencies worldwide, of which the most significant to operations are the Euro, Chinese Renminbi, Japanese Yen, Australian Dollar, Canadian Dollar, Pound Sterling and New Taiwan Dollar. For the year ended March 31, 2022, approximately 50% of our sales were in non-U.S. denominated currencies, with 25% of our sales denominated in Euro.
We transact business in approximately 30 currencies worldwide, of which the most significant to operations are the Euro, Chinese Renminbi, Japanese Yen, Australian Dollar, Canadian Dollar, Pound Sterling and New Taiwan Dollar. For the year ended March 31, 2023, approximately 51% of our sales were in non-U.S. denominated currencies, with 23% of our sales denominated in Euro.

Other LOGI 10-K year-over-year comparisons